The Department of Energy this week released its final request for proposals for a 10-year contract to manage and operate the Los Alamos National Laboratory: the storied nuclear weapons research site in New Mexico that will become the nation’s primary plutonium-pit-production facility under the next prime contractor’s watch.
The final solicitation is for a cost-plus-fixed-fee contract comprising a five-year base period worth and five one-year options. Those interested must submit a bid by Dec. 11, the Department of Energy’s semiautonomous National Nuclear Security Administration (NNSA) said in its solicitation.
In a small concession to industry and local interest groups that griped about low fee caps in a draft solicitation released in July, the NNSA’s final solicitation would give the next Los Alamos lab manager the chance to earn roughly $50 million in fees every year over the life of the contract. The caps the NNSA floated in the draft solicitation would have limited annual fees to about $30 million.
In the final solicitation, the NNSA capped the contractor’s lab-management fees at 1 percent per performance period for fixed fees, and 1.5 percent per performance period for award fees. At that rate, lab management fees over the 10-year life of the contract would max out at just over $540 million, including slightly more than $255 million in the five-year base period. Under the fee caps from the draft RFP, base period fees would have maxed out at just over $150 million.
The lab management portion of the contract will cost more than $21 billion over 10 years, including a little more than $10 billion in the base period, according to NNSA estimates bundled with the final solicitation. That excludes some $2 billion worth of work funded by agencies other than Energy over the life of the contract.
If the agency sticks to its guns and does not extend incumbent Los Alamos National Security’s (LANS) contract beyond its scheduled Sept. 30, 2018, expiration date, the four-month transition period on the new contract points to an award by the end of May. The semiautonomous stockpile steward imposed a $12.5-million cost cap on the four-month transition period.
In another nod to complaints from local and regional interest groups, the final solicitation includes an $8 million payment to the Los Alamos Public Schools, and lifted a restriction from the draft that would have prohibited pricing profits into subcontracts with small businesses that are part of the winning management team.
“NNSA is committed to pursuing a full and open competition for management of the Los Alamos National Laboratory that will provide the Department with the best opportunity for improving the terms and conditions of the contract to incentivize mission performance and cost savings for the taxpayer,” an NNSA spokesperson wrote in a statement emailed Thursday to Nuclear Security & Deterrence Monitor. “The Request for Proposal also addresses issues of concern to the local community, including continued support for protections for current employees, community commitments, Northern New Mexico small businesses, and regional university and educational partnerships.”
Los Alamos would, under the current U.S. nuclear arms modernization program, produce plutonium pits for nuclear-warhead cores. The lab also conducts some explosives research that supports the nuclear stockpile, and helps develop some of the high-end computer simulations used in lieu of explosive tests to ensure existing weapons remain potent.
LANS, a consortium headed by the University of California and lead industry partner Bechtel National, has managed the Los Alamos National Laboratory since 2006 under a contract worth roughly $2 billion a year. After a series of nuclear-safety mishaps at the lab, including a shoddy nuclear-waste-packing job that led to an underground radiation leak at the Waste Isolation Pilot Plant disposal facility near Carlsbad, N.M., DOE announced last year it would not pick up options on LANS’ contract that could have kept the incumbent on the job into the 2020s.
The University of California has all but confirmed it will bid on the follow-on contract, though with a different set of industry partners than those assembled for LANS. Besides Bechtel, these include BWX Technologies, which attended the August industry day the Department of Energy hosted in advance of dropping the final solicitation, and AECOM, which did not.
“The University of California has an exemplary record of excellence and public service in scientific and technological management of Los Alamos National Laboratory (LANL) over the many decades it has been involved in its stewardship,” a University of California spokesperson wrote in a statement Wednesday.
For most of the lab’s 70-plus-year history, the University of California managed the laboratory alone. The institution spearheaded the LANS partnership after DOE decided to privatize lab operations.
Also in the running for the follow-on contract is the University of Texas System. The University of New Mexico has also expressed interest, though it has not said whether it would bid as a prime or attach itself to another team’s bid.
Only one of the industry partners on LANS replied this week to requests for comment this week regarding their interest in the new contract.
“BWX Technologies consistently reviews opportunities to serve on the teams that manage and operate NNSA and DOE sites like Los Alamos National Laboratory,” Ken Camplin, president of BWX Technologies’ Nuclear Services Group, wrote in an email Thursday.”Private sector partners like BWX Technologies are agents of change and bring immense value to the management and technical leadership at laboratories and sites in areas such as critical nuclear manufacturing, working culture, and safeguards and security.”
A spokesperson for Boeing, which has courted DOE lab business, said Thursday the company “is continuing to review the request for proposal.”
One contractor that has lately scooped up billions of dollars in DOE contracts — for management of the nearby Sandia National Laboratories and teaming for liquid waste management at the Savannah River Site, amlng other wins — said it will not try to add Los Alamos to its portfolio.
“We are not pursuing this bid,” a spokesperson for Honeywell wrote in an email Thrusday. “We will focus on the awards we have recently won, ensuring we deliver exceptional service to our DOE customer.”
Lockheed Martin and Northrop Grumman, which also have a history of work on the nuclear weapons complex, did not reply to requests for comment this week.
