The manager of the National Nuclear Security Administration’s Y-12 and Pantex nuclear weapons plants received the lowest percentage of the available award fee in the agency’s latest performance reviews of its seven site management and operations contractors.
Consolidated Nuclear Security’s overall performance score (57 out of 100) and at-risk fee ($11.4 million of a maximum just under $20 million) were revealed in December when the NNSA fee letter was circulated. Then-CNS President Jim Haynes expressed the contractor’s disappointment at the time in a message to employees at the Tennessee and Texas facilities.
But reasons for the low score weren’t enunciated until the NNSA’s belated release late last week of the performance evaluation report, which cited significant missteps and failure to live up to expectations – particularly in the new contractor’s management of the nuclear weapons mission at Y-12 and Pantex, as well as security and other aspects of plant operations, since assuming the contract in July 2014.
The NNSA made clear, even in the executive summary, that the federal overseers in the Production Office didn’t see things that same way as CNS management team regarding the company’s performance. The report noted that CNS had submitted a self-assessment report, and that the contractor should be the commended for its thoroughness – “although it did not embrace the expectation of being self-critical.” The NNSA said it considered the CNS self-assessment, but noted “in most cases” it did not agree with the contractor’s rating as being very good.
In a statement Monday, CNS said it had made numerous changes – including an organizational realignment – in response to the NNSA review, which was completed in December but only made public last week. The contractor – a corporate teaming of Bechtel National, Lockheed Martin, Orbital ATK, and SOC — noted some of the difficulties in consolidating the management of the two production facilities. CNS called it an “unprecedented transition” of the NNSA sites in Tennessee and Texas and said it had encountered “several unexpected challenges as we sought to implement the requirements of the new contract.”
“We carefully considered feedback in the NNSA’s evaluation and sought to maximize our understanding of their view of our performance,” CNS said in the statement.
“In the five months since we initially reviewed the score, we have realigned our organization to better align with the NNSA and to increase our interactions with them,” CNS stated. “We have amplified our focus on Operations and Business Management, and enhanced senior management presence at both sites.”
In addition, the contractor said it had established a new Performance Excellence organization, improved Conduct of Operations, and “laid out a clear strategic plan that will guide us in the future.”
Consolidated Nuclear Security was rated in six operational areas, each given a different weight in determining the award fee. Topping the list was managing the nuclear weapons mission at the two key production plants, which accounted for 35 percent of the at-risk fee and for which the company received only a “Satisfactory.”
Several important factors affected the rating on the weapons mission, including quality issues, conduct of operations problems, and a work stoppage at Pantex during negotiations on a new bargaining agreement with union workers.
The report provided a detailed look at the company’s directed stockpile work on different weapons systems, including the life extension of W76-1 warheads. According to the report, Consolidated Nuclear Security accomplished 101 percent of the secondary schedule for the W76-1, met the shipments to the military, and achieved 85 percent of the NNSA’s total commitment to the Defense Department.
“CNS worked extensive overtime during the course of the year (on the W76-1), which drove an increase in program costs,” Any dollar figure? the report stated.
There was an issue regarding data entered into the system for completed W76-1 units, with one of the subassemblies getting a duplicate serial number. A follow-up review also revealed multiple duplicated serial numbers on W88 warhead subassemblies, according to the performance evaluation report.
In the dismantlement program, CNS achieved 101 percent of the dismantlements related to secondaries, but only 66 percent of the “revised Production Control Document” baseline schedule. The evaluation report said the “low performance” against the revised baseline schedule put the NNSA off pace for achieving its target to by 2022 permanently eliminate all warheads that were retired from deployment by 2009.
The report said CNS did not meet “many of the expectations” for quality of work, saying there were issues throughout fiscal 2015 that hampered the contractor’s ability to deliver products that met design specifications.
The report also cited quality issues on five of the six first production units for the newly configured B61 joint test assemblies. CNS did not meet the majority of expectations for “scheduled surveillance activities, deliverables and requirements as documented within each applicable weapons system approved Integrated Weapon Evaluation Team (IWET) Plans” and associated directive documents.
Y-12 and Pantex came under a single management contract, effective July 1, 2014, and the NNSA made some positive notes associated with that new arrangement. According to the evaluation report, Consolidated Nuclear Security loaned Y-12’s engineering resources to a Pantex project that helped save a significant amount of time and “possible cost savings” for implementation of a non-destructive laser gas sampling system.
The report, meanwhile, said Y-12 was able to re-establish key B61 processes that hadn’t been used in more than a decade to support early development of hardware for the B61-12 life-extension project.
Also at Y-12, however, the contractor did not meet expectations for introducing the use of a production microwave caster at Y-12, citing a number of issues that impacted the schedule.
Some of the strongest criticism was included in the federal oversight team’s critique of operations and infrastructure, including a reference to last year’s mix-up in which Y-12 accidentally shipped too much highly enriched uranium to a commercial facility in New York.
Here’s an excerpt from the evaluation report:
“A lack of formality of operations persists as evidenced by operational failure to consistently implement security-based requirements; recurring events in the protection of Personally Identifiable Information and Unclassified Controlled Nuclear Information (e.g., off-site locations) indicated that a sound strategy for integrating security requirements among the CNS business partners doesn’t exist; and that a lack of understanding regarding security-based requirements is evident.
“An event involving the packaging and shipment of highly enriched uranium highlighted the overall lack of success that CNS has experienced in turning around performance as related to conduct and formality of operations. A shipment from Y-12 to an offsite laboratory exemplifies this culture and performance problem. Areas of concern include supervisory engagement and control, procedural compliance, manual manipulation of data, lack of questioning attitude, and confidence in material control and accountability. The CNS initiative to strive for performance excellence, which encompasses formality of operations and an increased safety and security conscious work environment, has not yet shown results.”
Some observers were surprised that Consolidated Nuclear Security was awarded more than $42 million in total fees, including nearly $30 million in fixed fees, considering the overall low performance score. That is partly explained by the fact that a fixed fee was used for some program activities during the first year of the CNS management contract, but those are expected to be tied to performance in future evaluations and fee awards.
The Bechtel-led team said the changes made in recent months have already “paid dividends in enhancing our performance in support of our mission to safely and securely help maintain the nation’s nuclear deterrent.”
