Todd Jacobson
NS&D Monitor
3/14/2014
In a twist befitting the National Nuclear Security Administration’s topsy-turvy Y-12/Pantex procurement, the latest protest by B&W-led Nuclear Production Partners (NP2) had the company stressing its weaknesses and the NNSA citing the “significant benefit” of NP2’s proposed cost savings, had the agency picked NP2 instead of Bechtel-led Consolidated Nuclear Security for the $22.8 billion contract. However, the Government Accountability Office didn’t buy it, according to a 19-page protest decision released this week. The decision sheds light on the GAO’s Feb. 27 rejection of the latest protest of the National Nuclear Security Administration’s Y-12/Pantex contract award by Babcock & Wilcox-led Nuclear Production Partners (NP2), including an evaluation of NP2’s cost savings that was central to the company’s wide-ranging protest. The protest was NP2’s third since the NNSA first selected Bechtel-led Consolidated Nuclear Security for the contract in January 2013.
In defending the NNSA’s evaluation of the feasibility of the cost savings proposed by the bidders, the GAO said the NNSA performed a “comprehensive analysis” and was within its rights to judge the cost savings initiatives proposed by the bidders. “These judgments were based on the substantial experience and technical expertise of the agency’s personnel and consultants,” the GAO said. “While [NP2] is clearly dissatisfied with the agency’s various judgments and comparative assessments, it has failed to demonstrate that they were, in any material way, unreasonable.” B&W declined to comment on the GAO’s decision this week, and has not offered any hints about its future plans. While the company has exhausted its ability to protest the NNSA’s decision to the GAO, it still could take its fight to the U.S. Court of Federal Claims, though CNS has already begun transition at Y-12 and Pantex. B&W would have to seek an injunction to stop transition from continuing.
When a Strength Becomes a Weakness
In its protest, NP2 argued the NNSA should have opened up discussions to address its determination that an unspecified percentage of NP2’s cost savings proposals were deemed not feasible. NP2 argued that the determination represented a “significant weakness,” but while the NNSA deemed a portion of the cost savings not feasible—previous protest documents suggested cost savings proposed by both CNS and NP2 were less than 80 percent of their total proposed savings, the threshold for earning a contract extension—it still rated NP2’s management approach/cost savings as excellent, though it found a lower percentage of NP2’s cost savings were feasible when compared to those proposed by CNS. The exact feasibility percentages were not revealed.
The government is required to open up discussions with a bidder if there are significant weaknesses, deficiencies, or adverse past performance to which it hasn’t had a chance to respond, but the GAO said “an agency need not discuss areas in which a proposal may merely be improved, nor is an agency required to point out every aspect of a proposal that offers a less desirable approach than that offered by its competitors.”
Details of NNSA Selection Come to Light
The NNSA has said little about its November decision to select CNS a second time, but the GAO’s decision reveals that Source Selection Authority Bob Raines took the same approach as his predecessor, Michael Lempke, and raised the Source Evaluation Board’s ratings of CNS from “good” to “excellent” in three categories: corporate experience and project management approach under the first Contract Line Item Number (CLIN) for combined management of the sites, and key personnel and orals under the second CLIN for the Uranium Processing Facility.
The changes allowed CNS to match NP2’s evaluation, and according to the GAO’s decision, Raines identified “various discriminators” between the two proposals, concluding CNS had an edge in two evaluation categories and NP2 an edge in one category. In one of the categories, management approach/cost savings, the GAO said NNSA’s evaluation revealed that CNS outshined NP2 due to its cost savings approach, its “superior approach to small business utilization,” its “approach to creating a culture of continuous improvement that increases the likelihood of the Government realizing proposed savings” as well as another reason that was redacted from the protest document.
CNS Downgraded Due to Conduct of Dan Glenn
NP2 came out ahead in another category, key personnel and orals, after the SSA considered information that former B&W executive Dan Glenn—a member of the CNS bid, believed to be proposed as the top contractor official at the Pantex Plant—had changed his story in a trade secrets case pitting him against B&W, acknowledging that he had kept thumb drives that held B&W information after initially saying he had not kept the drives. B&W had argued that the NNSA hadn’t taken into account the information about Glenn when making its decision, but the GAO said the SSA ruled that his conduct “‘is inconsistent with DOE/NNSA’s focus on full transparency’ and removed a previously-assigned CNS strength” and concluded that NP2 had a “slight advantage” over CNS under key personnel and orals.
URS Performance on IWTU Hurt NP2
The difficulties encountered to date in getting the Idaho Integrated Waste Treatment Unit up and running also played a role in the SSA’s decision to favor CNS over NP2 in the area of past performance under UPF. NP2 also includes URS, which is also part of CH2M-WG Idaho (CWI), the cleanup contractor at the Department of Energy’s Idaho site responsible for the IWTU project. According to the GAO decision, the IWTU issues hurt NP2 when it came to evaluating the contractor’s past performance issues concerning its proposal for UPF.
The decision states that “while both CNS and [NP2] were rated satisfactory, the SSA noted a significant risk associated with performance of an [NP2] team member, URS Energy & Construction, Inc., on the ‘Integrated Waste Treatment Unit’ (IWTU) project.” The decision adds, “Although the project was completed in April 2012, ‘it has not successfully been put into operation.’ Accordingly, the SSA concluded that CNS ‘has a slight advantage over NPP’ under this evaluation factor.” URS declined to comment on the issue this week.
The lower percentage of feasible cost savings also clearly hurt NP2, as Raines concluded that “NPP [NP2] would need to ‘reach farther’ than CNS to extend contract performance, noting that NPP’s efforts in this regard ‘could lead to a loss of management focus on security, safety, and mission,’” the GAO’s decision revealed. The documents also reveal that CNS proposed earning less performance fee, $725.7 million versus $793.9 million. The performance fee is only part of the fee that can be earned under the contract. Contractors can also earn a percentage of the cost savings, and while those figures were not released, officials with knowledge of the procurement said NP2 cost savings fee was less than the cost savings fee proposed by CNS.
GAO Rejects Challenges to NNSA Evaluations
The GAO also rejected NP2’s challenge to what it described as “virtually every aspect of the agency’s substantive evaluation of proposals and the bases for its source selection decision.” According to the GAO, NP2 challenged the evaluation of every cost savings initiative it proposed that was found to be less than 100 percent feasible, virtually every discriminator used by the SSA to select CNS, argued that some parts of its proposal should have been considered a strength or a discriminator, and “generally complains that it was treated unfairly and unequally.”
In one example, the GAO turned away NP2’s argument that NNSA unfairly considered its proposed cost savings for reducing the benefits of union and non-union employees less than 100 percent feasible. In another example that was rejected by the GAO, NP2 argued that its proposed cost savings related to pensions for non-union employees should not have been found to be 50 percent feasible. “In reviewing an agency’s evaluation, we will not reevaluate offerors’ proposals; instead we will examine the agency’s evaluation to ensure that it was reasonable and consistent with the solicitation’s stated evaluation criteria and procurement statutes and regulations,” the GAO said.
In that regard, the GAO dismissed NP2’s challenges. “[NP2’s] various complaints reflect mere disagreement with the agency’s considered judgment,” the GAO said, later adding: “We have reviewed all of [NP2’s] assertions regarding alleged unfairness and inequality, and find [NP2’s] arguments unpersuasive.”
