Todd Jacobson
NS&D Monitor
6/20/2014
The National Nuclear Security Administration took the first tentative steps toward competing its Kansas City Plant contract this week, issuing a Request for Information June 18 that seeks input from companies interested in the contract to run the agency’s main non-nuclear production facility. Honeywell Federal Manufacturing & Technologies has been the longtime contractor running the facility, and when the contract was last competed in 2000, it had no competition to retain the contract. Honeywell has been one of the highest performing contractors in the weapons complex and is on the verge of completing a move into a new plant, but the RFI seems tailored toward figuring out how to generate interest in the contract. Honeywell’s contract to run the site expires Sept. 30, 2015. “What they want to know is if I compete it, will anyone come?” one industry official told NS&D Monitor.
In the RFI, the NNSA asks companies whether they’d be interested in bidding for the contract, and for input on “physical, financial, legal, or technological barriers” to competition or other risks to companies that the agency should consider. The agency said it envisions a five-year contract with another five years in options. “NNSA is considering whether to conduct a competitive acquisition for a follow-on contract and industry input is of significant interest to NNSA as the acquisition strategy is developed,” the agency said.
The NNSA also asked companies for suggestions on improvements to the current contract and to the solicitation process, including ideas for “proposal preparation instructions and evaluation criteria that would streamline the solicitation” and “meaningful cost estimating information” that could be included in bids and used by the agency to evaluate costs. Responses to the RFI are due to Contracting Officer Steve Sandager by 5 p.m. Mountain Daylight Time July 8.
Incumbent Honeywell to be Tough Competition
Any company interested in the contract will have to contend with Honeywell, which in Fiscal Year 2013 was the highest performing contractor in the weapons complex. Honeywell led all contractors by earning 94 percent of its at-risk fee, or $28.2 million out of $30 million that was available. It also earned another $15.7 million for non-NNSA work. Honeywell also recently said it will complete a move into a new plant in July, one month ahead of schedule and $10 million under budget, but some industry officials speculated that Honeywell’s success—and the completion of the move—could make it the right time to compete the contract. “It’s a new a ballgame,” one official said. “It’s a new facility. It’s a new baseline. It might be the right time to consider non-long-term incumbents that keep winning and winning again.”
Another industry official also suggested the completion of the move could make it more likely for NNSA to compete the contract. “The question is how hard is it now that they’ve got a new building?” the official said. “It’s kind of like a new car. Anyone can drive a new car. You don’t have a lot to worry about. You’re not worrying about it breaking down and you’re not worrying about it having to be repaired.”
In a statement, Honeywell FM&T spokeswoman Shaunda Parks said the company would “welcome” the opportunity to provide feedback to the NNSA. “Honeywell has a long-standing track record of performance and delivering exceptional solutions to the NNSA in support of a more responsive and cost-effective nuclear security enterprise,” she said. “We are completing one of the largest U.S. industrial moves ahead of schedule and more than $10 million under the anticipated Total Project Cost, all while delivering our strongest safety performance on record, outstanding security performance and continuing to meet our customer commitments.”
A Focus on Cost Savings?
The NNSA also might be looking at the contract as a way to save money, another industry official said. The official noted that the RFI made mention of cost savings initiatives. “It’s all going to be about faster, better, cheaper, let’s face it,” the official said. “You see in the front part of the RFI: ‘Tell us what’s important on cost.’ There is not an agency in this world today that isn’t talking about that.” Others suggested that the NNSA could seek to reduce the fee paid for running the Kansas City Plant, which at 7 percent is the highest in the weapons complex.
The nature of the work at Kansas City also could make it an appealing target for companies looking to get into the DOE business. Unlike other sites, the work at Kansas City is the closest to industrial manufacturing. It involves incredibly high precision and rigorous requirements, but it does not involve nuclear materials. “There is obviously a level of intellectual manufacturing but it’s not rocket science, it’s not dealing with the unknown,” another industry official said.
While it’s unclear what companies might step up to compete or at least show interest, industry officials suggested that top Pentagon contractors like Lockheed Martin, Boeing, Northrop Grumman, General Dynamics, and Raytheon could show interest, as well as IBM and Babcock & Wilcox. “They have a legal obligation to test the waters and see if there is a better widget out there,” another official said. “I can’t say there is or there isn’t but at some point in time I think NNSA has to determine whether we want to maintain status quo or we want to send a message that says we want competition, and we’re going to make a change. I think they’re at that point.”
