Over the winter holidays, the Department of Energy revealed it will raise the value of the $4-billion landlord contract held by Leidos-led Hanford Mission Integration Solutions at the Hanford Site in Washington state to more than $5.3 billion.
Without the modification the current contract ceiling “is insufficient to enable the contractor to continue full operations for the base period of performance or full performance under the optional periods” that could stretch into 2030.
The actual contract modification would take place in March.
“There are several factors relevant to the request, including inflation impacts and impacts from aging site infrastructure”, a DOE spokesperson, told Exchange Monitor Thursday via email. For example, the spokesperson said DOE is revamping Hanford’s Waste Encapsulation and Storage Facility as a prelude to moving radioactive cesium and strontium capsules to dry storage starting in fiscal 2025.
A Bureau of Labor Statistics tracker for Consumer Price Inflation suggests $3.9 billion in January 2020 has the same buying power as $4.6 billion in December 2023.
But two weapons complex senior managers with companies not affiliated with Leidos, believe there is more to the hike than inflation.
“DOE essentially undervalued the scope in their RFP [request for proposals], and Leidos isn’t to blame,” an industry source told the Monitor Wednesday.
A second industry source agreed, saying DOE and Hanford Mission Integration Solutions have discussed raising the contract’s value “since basically the day it was awarded” in December 2019.
The agency’s thinking was apparently to get a contract in place and tweak the numbers later, the second source said. Leidos also led the prior Hanford landlord team, and while about $4 billion over 10 years is significant, the contract is still modest compared with the site’s more lucrative contracts for managing tank waste and Central Plateau cleanup, the source said by phone Thursday.
“The proposed contract ceiling increase of $1.3B will allow Hanford site infrastructure services, which support the cleanup operations being conducted by the other Hanford site contractors, to continue uninterrupted,” DOE’s Office of Environmental Management said in a Dec. 29 notice published in the System for Award Management (sam.gov).
“The increase will result in additional opportunities for small business subcontracting,” according to the notice.
Lack of the increase could severely hinder the landlord contractor’s ability to support the other Hanford contractors to meet the cleanup mission requirements of the Tri-Party Agreement. The agreement, reached in 1989 between DOE, the state of Washington and the U.S. Environmental Protection Administration, outlines cleanup milestones for the former plutonium production complex.
Hanford Mission Integration Solutions, made up of Leidos, Centerra and Parson Government Services, acts as a city manager for the sprawling Hanford Site and its 10,000 workers. The contractor oversees fire, rescue and emergency services as well as infrastructure for roads, water and electricity.
