The Department of Energy pushed back against a new Government Accountability Office (GAO) recommendation that local agency field offices investigate the ownership of subcontractors on nuclear sites for potential conflicts of interest.
Local DOE officials should “independently review subcontractor ownership information as part of DOE consent reviews and assess potential conflicts of interest to ensure contractors are mitigating them,” GAO auditors said in a 76-page report published Tuesday. “By requiring contracting officers to independently review subcontractor ownership information, DOE and [the National Nuclear Security Administration] would have better assurance that contractors are adequately identifying and mitigating organizational conflicts of interest.”
John Bashista, director of DOE’s Office of Acquisition Management, said that responsibility can remain with DOE contracting officials.
Instead of requiring local feds to perform due diligence on subcontractor ownership, “DOE will issue guidance emphasizing the importance of contracting officers reviewing contractors’ … close working relationships, conflicts of interest, or ownership affiliations between the prime and subcontractor,” Bashista wrote in a Feb. 7 letter to the GAO responding to the recommendation.
The National Nuclear Security Administration (NNSA), which manages contracts for active nuclear-weapon sites independently of DOE, will have to decide whether to issue such guidance, Bashista wrote. The broader DOE will finalize its guidance to contracting officers by Aug. 9, he stated.
The Government Accountability Office examined subcontracts active in 2016 at current and former DOE nuclear-weapon sites. Of $23 billion under contract at DOE that year, some $6 billion went to subcontracts, including about $930 million to entities that were part of DOE prime contracts. DOE is a roughly $30-billion-a-year agency.
The GAO said DOE and NNSA sometimes failed to keep records up to date after corporate mergers, acquisitions and divestitures that changed the ownership picture at nuclear sites — something that could subsequently change or obscure relationships between site primes and subcontractors.
As an example, GAO cited AECOM’s 2014 acquisition of URS Corp., which made the acquirer a part to seven DOE prime contracts including the Los Alamos and Lawrence Livermore National Laboratories. Years after the acquisition, AECOM still was not listed in official DOE literature as a party to all of the sites formerly managed by teams including URS, GAO said.
Similarly, BWX Technologies was not always listed as a partner on entities formerly including Babcock and Wilcox Co., from which the former was spun off in 2015, GAO said.
A notable example of subcontractors party to prime contracts in the NNSA enterprise is Bechtel National. The company is the lead partner on Consolidated Nuclear Security (CNS), operator of the Y-12 National Security Complex in Oak Ridge, Tenn., and the Pantex weapons assembly plant in Amarillo, Texas. At Y-12, the company is building the Uranium Processing Facility under a subcontract to CNS.
While GAO took noted of the complex contractual situation at Y-12, the office did not report any prohibited conflict of interest in the arrangement. The NNSA expects the Uranium Processing Facility to cost $6.5 billion to complete by 2025.
To illustrate the intertwining relationships between NNSA contractors, subcontractors, and the parent companies of both, the Government Accountability Office created an interactive graphic that shows which individual companies own or influence prime contractors and subcontractors across the nuclear security enterprise and the former Cold War weapons complex.
