October 13, 2014

NNSA: More Fixed-Price Contracting Part of Project Mgmt. Improvement Strategy

By ExchangeMonitor

The National Nuclear Security Administration plans to continue to increase the use of firm fixed-price contracting for non-major capital projects as one of the strategies to improve its project management, the agency said in a report to Congress last month obtained by NS&D Monitor. The Congressionally mandated report notes that NNSA has made progress in improving project management over the past three years, completing $725 million in projects approximately $50 million under budget. The progress has come on smaller projects, with multi-billion-dollar projects like the Uranium Processing Facility, Chemistry and Metallurgy Research Replacement-Nuclear Facility and Mixed Oxide Fuel Fabrication Facility suffering massive budget and schedule increases, and the agency acknowledged while it is “delivering results” that “we still have work to do.”

The greater utilization of fixed-price contracts has helped on non-major projects, the agency said. The strategy was used for 20 percent of the total project dollars for non-major capital projects in Fiscal Year 2014, up from 3 percent in FY 2010, the agency said. Technology and design maturation, “upfront and robust funding,” and top project management talent is essential to shore up performance on major projects, the agency said. “NNSA will achieve this by appropriately sharing risk, utilizing the following principles: competition, firm-fixed price contracts, and contracts that include all at-risk fee or provisional fee based on satisfactory completion of work,” the agency said.

The NNSA also said it will continue to increase the reliance on the Army Corps of Engineers until it adequately strengthens its federal project management ranks. Currently, the agency relies on federal, Army Corps and contractor support staff, but it said it wanted to be “self-sufficient” in managing its capital projects by 2019.

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