Todd Jacobson
WC Monitor
1/9/2015
In an unprecedented move, the National Nuclear Security Administration has drastically reduced the Fiscal Year 2014 fee for Los Alamos National Laboratory contractor Los Alamos National Security (LANS) because of “performance failures” associated with the February 2014 radiological incident at the Waste Isolation Pilot Plant while stripping the contractor of one year of its contract. LANS, a team led by Bechtel and the University of California, earned $6.2 million for the year, just 9.7 percent of the $63.4 million in fee that was available under its contract, after Contracting Officer Robert Poole “unilaterally” zeroed out $17.1 million in fixed fee and $18.2 million in incentive fee (45 percent of $40 million available) that was due to the contractor. LANS also did not earn an award-term extension to its contract, and NNSA Principal Deputy Administrator Madelyn Creedon revoked a previously awarded one-year extension because of the “significant performance failure.” LANS’ contract now runs through Fiscal Year 2017.
The only fee earned by LANS was $6.2 million in Work For Others fee, which is work for other government agencies. In a Dec. 18 letter documenting the reductions, Poole said the actions are “in direct response to issues of significant operational and cost magnitude,” calling the failures with the WIPP incident “significant or ‘First Degree’ performance failure with respect to the contract’s Environment, Safety and Health term conditions. Specifically, performance failures created damage to DOE property or costs for cleaning, decontaminating, renovating, replacing or rehabilitating property that in aggregate exceed $2.5 million.” A drum of transuranic waste processed at Los Alamos has been associated with the February radiological release at WIPP that has shut down the facility. Poole added: “The NNSA looks forward to working with LANS to improve the accountability for safe, secure, effective, efficient, and economical performance at the laboratory in 2015.”
Performance Hits a New Low
In FY 2013, Los Alamos earned 82 percent of its at-risk fee ($34.1 million out of $41.7 million available) and $59.3 million overall while not earning an award-term extension. The previous year, Los Alamos earned 68 percent of its at-risk fee, disqualifying it from earning an award-term extension, though then-acting NNSA Administrator Neile Miller waived the 80 percent fee threshold requirement and gave the lab an extra year on its contract.
The fee determination represents a stunning rebuke of the laboratory, which had never earned less than 68 percent of its at-risk fee and until last year had earned each award-term possible. Under its initial contract, LANS could have earned extended its contract through 2026, but now it can only stretch the deal through 2023 if it earns the six remaining award terms. Despite the fact that LANS contract currently expires in two-and-a-half years, NNSA spokeswoman Shelley Laver said the agency is not beginning to plan to recompete the contract. “We look forward to their improved performance in FY 15,” Laver said. “As such, it is premature to speculate on the timing of a re-compete.”
A Santa Fe-based nuclear activist group said the lab’s FY 2014 performance should move the NNSA to recompete the Los Alamos contract and rethink the amount of fee paid to lab contractors. “This sends an unmistakable message to contractors that they will be held accountable, which has been sorely missing to date,” Nuclear Watch New Mexico Director Jay Coghlan said. “However, in light of LANS’ miserable performance, NNSA should take the next big step and put the management contract out to bid. NNSA and Congress should also consider whether for-profit management of the nuclear weapons complex is really in the country’s best interests, when the track record demonstrates that it’s not.”
LANL Director: Nat’l Security Work Exceeded Expectations
In a message sent to lab employees last week, LANL Director Charlie McMillan acknowledged the lab’s shortcomings in regard to the WIPP incident but said its national security work “exceeded” expectations. “I want to emphasize that our true value as a Laboratory should be measured by the contributions we make to national security,” he said. “This is something we can all be very proud of. According to the PER our nuclear weapons mission and global security mission each ‘exceeded expectations.’ ”
McMillan, however, acknowledged that it was a difficult year for the lab. In addition to the problems related to WIPP, the lab’s Plutonium Facility has largely been shut down since June of 2013 due to nuclear criticality safety concerns. “Although this was a very tough year for the Laboratory I am optimistic that next year will be better,” McMillan said in the message to employees. “I am determined to do all that I can to make it so. My personal priorities will be to continue to make progress on getting PF-4 fully restarted, continuing collaboration with DOE on an effective and efficient transition of the Environmental Management program scope, and enhancing our management and leadership capabilities by filling key vacancies and correcting operational deficiencies.”
Before the lab’s incentive fee was zeroed out, it had earned 87 percent of its fee ($7 million out of $8 million available) for nuclear weapons mission work and 80 percent ($6.4 million out of $8 million) for broader national security mission work. It earned no fee for operations and infrastructure, and only 30 percent ($2.4 million out of $8 million) in two separate categories: science, technology and engineering and leadership. “The decision underscores how important it is for the Lab to fully address our operational failures and improve the conduct of our operations across the board, all while maintaining our strong science, weapons, and global security mission performance,” LANL spokesman Matt Nerzig said in a statement.
