Todd Jacobson
NS&D Monitor
1/31/2014
The National Nuclear Security Administration this week released the detailed Fiscal Year 2013 Performance Evaluation Reports for its eight sites, shedding light on what its contractors did well—and not so well—during FY 2013 (links to the reports for each site can be found on the NNSA’s web site). B&W Y-12, still working to repair its image after the July 2012 security breach at the site, was the low scorer across the complex, earning 57 percent of its at-risk fee ($43.9 million out of $76.6 million available) despite efforts to shore up security and safety at the site in the wake of the security breach. While there were no major slip-ups like the security breach during FY 2013, the PER revealed that the contractor was downgraded for continuing problems in the area of security and for challenges on the Uranium Processing Facility project. In July of 2013, a machine gun was accidentally fired inside an armored vehicle, which the NNSA said was an indication that the site’s security program “requires continued management attention.”
The report also noted that the UPF project had a “challenging year” as it was plagued by “problems in configuration control of design criteria and estimate validity” that it said “continue to impact the project despite significant government interaction to highlight these issues.” The report also noted that the project’s baseline for engineering and design has continued to increase since a mid-year replan, and the “Total Project Cost has been impacted by growth in the quantity of commodities and the use of management reserve has exceeded plan.” The report also praised the contractor in many instances, noting that B&W Y-12 “demonstrated leadership supporting the current NNSA mission direction, responding appropriately to issues and sought opportunities for continuous internal improvement backed with the parent company’s commitment.”
SRNS Faces Harsh Criticism for Construction Issues
Savannah River Nuclear Solutions also took a significant hit on its fee in Fiscal Year 2013, receiving just 68 percent of its available fee, as successes were offset by struggles on the Waste Solidification Building project and plutonium oxide production efforts. According to the PER, the schedule for completion of the Waste Solidification Building slipped 10 months, costing an extra $15 million, which the NNSA noted was a “continuing trend of unsatisfactory performance for this project.” The agency added: “These performance failures come at a time when NNSA and its corporate partners are facing substantial scrutiny related to major construction project performance and program execution performance. The lack of progress on the WSB project is especially troubling in light of the fact that senior NNSA leadership discussed with senior SRNS leadership its serious concerns about challenges to these projects. The management actions were not effective in addressing the concerns and the projects fell further behind throughout the performance period. The inability of SRNS to corporately solve these challenges is of continuing concern.”
SRNS was credited for meeting 100 percent of its tritium reservoir shipments, an improvement from recent years, and for managing NNSA work under difficult conditions. “FY13 presented numerous budget challenges throughout the year which included operating under a federal government Continuing Resolution (CR) and mid-year funding reductions due to budget sequestration enactment,” the NNSA said. “SRNS was responsive to budget changes throughout the year and was still able to meet special NNSA HQ requests to complete activities by exercising sound business practices and adapting management priorities.” The NNSA said there were no quality issues, and applauded SRNS for conducting its work safely and securely. “All this was performed at a time when the Office of Environmental Management budget at SRS was declining and SRNS was required to ensure that NNSA interests were not impacted due to reductions in landlord services,” NNSA said.
LANL, LLNL Fail to Earn Award Term Extensions
For the first time, Los Alamos and Lawrence Livermore national laboratories did not receive award-term extensions. The labs were granted waivers last year despite not meeting all of the performance objectives for the extensions, and the agency over the last year increased the threshold for having an extra year tacked onto the back end of their contracts. Now, the labs are required to earn 80 percent of its fee in five at-risk performance areas, whereas in the past the labs needed only to surpass the 80 percent threshold in four of five categories.
Lawrence Livermore National Security, LLC, was also lauded for a host of positives, but those highlights were overshadowed by management concerns, safety problems and issues in the lab’s Inertial Confinement Fusion program. Overall, Livermore earned 78 percent of its at-risk fee ($21.5 million out of $27.6 million available) and $41.3 million total, including fixed fee and Work for Others fee. But the lab’s fee was reduced$365,000 for an acid splash incident at its Site 300. Two employees received acid burns to their faces, torsos and extremities from a direct acid splash, and a third employee was exposed to sulfuric acid mist but was not seriously injured. The NNSA said that “inconsistencies were evident in the level of supervisory oversight of personnel and expectations for ensuring safe work procedures,” and it added that in addition to the injuries suffered by the workers, operations were “delayed and significantly slowed and an important facility was rendered unusable for an extended period.”
Livermore Downgraded for Management Problems
The lab was downgraded the most in the area of contractor leadership, where it received just 40 percent of its fee. Notably, lab director Parney Albright abruptly announced his resignation in October, and he was replaced on an acting basis by Los Alamos weapons program chief Bret Knapp while a national search for Albright’s successor is conducted. In vaguely criticizing the lab’s management, the NNSA said “on several occasions, LLNL management engaged Congress contrary to stated NNSA strategy or in open opposition to that strategy.”
Within the lab’s ICF program, the NNSA said efforts to alleviate the impact of an overhead rate change within the ICF program was adversely affected by communication problems at the lab. “NIF operating costs and assumptions were not transparent or well communicated to the NNSA Program Office, which made it more difficult to understand programmatic tradeoffs with FY13 budget pressures,” the NNSA said. The NNSA also said the lab “mismanaged external communications in several instances regarding ICF activities and budgets,” and it noted that several mid-year organizational changes led to some improvements.
At Los Alamos, More Progress Expected from NNSA
In its review of Los Alamos National Security, LLC, the NNSA suggested more progress should have been made in several areas that were of concern when the contractor took over management of the lab in 2006. “Seven years into this contract, while significant gains have been made, challenges still exist in: Criticality Safety, Conduct of Operations, Safety Basis, Project Management, and Weapons and Non-Proliferation Product Quality,” the NNSA said. “Institutionally, the Laboratory faces challenges in maturing the Contractor Assurance System (CAS) that is required for continuous improvement in a ‘learning organization,’ in moving toward an aggressive Cost Management culture; and in achieving a satisfactory Control Environment with the associated rigorous internal controls.” Overall, Los Alamos earned 82 percent of its at-risk fee ($34.1 million out of $41.7 million available) and $59.3 million overall, and without an award term extension, its contract continues to run through FY 2018.
Los Alamos was downgraded most in the area of operations and mission excellence, where it received a “satisfactory” rating and only 49 percent of its at-risk fee. The NNSA was diplomatic in its review, lauding the lab for many positives but suggesting there were “missteps that have reflected adversely on the institution in the areas of security, contractual propriety, and project completion.” The NNSA also noted that in areas of recurring concern for the lab, the “tempo of progress has been less than was expected.” Those areas include formality of operations maturation; safety basis maturation; the Earned Value Management System and associated construction performance; the maturation of cyber metrics; quality assurance performance; integration of safety into design for the Transuranic Waste Facility; and long term site stewardship efforts needed to sustain an aging infrastructure.
PF-4 Criticality Problems Cited
The NNSA was most critical of the lab’s criticality safety work. The lab halted operations last summer at its Plutonium Facility over concerns about criticality safety, and full operations still have no resumed. The NNSA said “management inattention and delay early in the fiscal year resulted in a persistent downward trend in assurance of the program’s adequacy and long-term viability” and “contributed to conditions leading to a Plutonium Facility (FP-4) programmatic pause; and is limiting the rate of PF-4 resumption.”
Other Sites Earn Kudos
While there were problems at some weapons complex sites, the performances were offset by solid years from other contractors, including Kansas City Plant contractor Honeywell Federal Manufacturing & Technologies, which led all contractors by earning 94 percent of its at-risk fee. Lockheed Martin-run Sandia National Laboratories and Northrop Grumman-led National Security Technologies, LLC, earned 90 percent ratings, while B&W Pantex earned a rating of 88.
The NNSA said Honeywell exceeded almost all of its FY 2013 performance targets while transitioning to a new facility, lauding the company for performing “in an exceptional manner under difficult and challenging circumstances.” Sandia was credited with effectively managing Directed Stockpile Work, Campaigns, Readiness in Technical Basis and Facilities programs, executing the Science and Inertial Confinement Fusion Programs and upgrading the Z Machine while improving safety at the lab, while National Security Technologies was praised for maintaining strong leadership across the site’s diverse mission areas. However, the NNSA said site leadership was not proactive in addressing an important missed milestone for the Source Physics Experiment program.
Pantex Met 93% of Deliverables
The NNSA said B&W Pantex met 93 percent of its agreed-to baseline deliverables during FY 2013 because of budgetary issues, technical and facility problems, severe weather delays, and a planned replacement of the plant’s Enterprise Resource Planning System. The agency praised the contractor for meeting 100 percent of its highest priority deliverables, which included the W76-1 life extension program deliveries to the Navy and Joint Test Assemblies for flight and lab tests. The plant only met 88 percent of its adjusted baseline for warhead dismantlements, and only achieved 58 percent of the planned B83 dismantlements.
