Todd Jacobson
NS&D Monitor
3/21/2014
The National Nuclear Security Administration at long last is moving to compete the Sandia National Laboratories management and operating contract, announcing this week that it is extending Lockheed Martin’s contract to run the lab for two years (with an option for a third) while it prepares to open up the contract for competition. Lockheed Martin’s current contract to run the lab expires at the end of the month, and the NNSA said it is extending the current contract a month while it negotiates a longer-term extension with the lab contractor. The long-term extension will “allow the contract and the subsequent competition to incorporate recommendations from the congressional advisory panels as well as Departmental initiatives to improve the mission effectiveness and the cost efficiency of the NNSA laboratories,” the NNSA said in a statement.
The NNSA has said little about its plans for Sandia since issuing a Request for Information on consolidating all or part of the Sandia contract with the Kansas City Plant’s management and operating contract in August 2012, but in recent months, Energy Secretary Ernest Moniz is believed to have sided toward a shorter term extension and a competition at Sandia. Acting NNSA Administrator Bruce Held also has recently suggested that the agency move away from its current contracting strategy and toward more of a “public interest” model for its M&O contracts that includes substantially lower fees than have accompanied recent contracts at Los Alamos, Lawrence Livermore, and Y-12/Pantex. In a statement, Sandia National Laboratories Director Paul Hommert welcomed the announcement. “This is a positive development that offers stability for the Labs and the workforce, and I look forward to concluding the details of this arrangement in the near term,” Hommert said in a message to employees.
‘Drastically Different’ Extension Not Envisioned
NNSA spokeswoman Keri Fulton also said the contract extension will not vary greatly from Lockheed Martin’s current deal to run Sandia, which includes a fee-earning potential that is much lower than that of Los Alamos and Lawrence Livermore national laboratories. “Over the next month, NNSA and SNL will negotiate the terms of the contract extension,” she said. “NNSA will seek improvements but does not envision a drastically different contract than the current structure.”
Sandia is expected to be the first contract competition where the new approach is put into effect. Fulton emphasized that there is no current competition, and it hasn’t been determined whether a future competition will only involve Sandia. “As a result of the RFI process, NNSA decided not to undertake a major realignment of Nuclear Security Enterprise contracts at this time,” Fulton said. “The Secretary of Energy thought it was important to extend the contract pending more certainty on the results of the several Congress-directed studies and reviews on NNSA governance and laboratory governance. The next contract competition will be able to capture these results. A detailed plan will be forthcoming likely in the next 18 months.”
‘There’s a Lot We Still Don’t Know’
While industry officials welcomed the announcement about Sandia, it appeared to generate as many questions as answers. “There’s a lot we still don’t know,” one industry official told NS&D Monitor. “There’s no acquisition strategy, there’s nothing. We’re nearly in the same spot we were two or three years ago.” Pushing back the decision also could create complications with other looming NNSA procurements. Over the next three years, the contracts for the Nevada National Security Site (2017) and the Kansas City Plant (September 2015) also expire, creating a potential logjam of procurements. “The idea that three contracts will be in the same window might overload the system,” the official said. “Our only question is will they do them in parallel or in a series and how they will prioritize each of them.”
Another industry official worried that delaying the start of a competition would place decision-making for the procurement in the hands of a new Administration, which is likely to have its own set of ideas about the contract. “Clearly this is one of those where if it really is three years, it just is basically saying, ‘We don’t want to deal with it. Take it off of Moniz’s and [NNSA Administrator nominee Frank] Klotz’s watch.”
There is expected to be no shortage of companies eager to compete for the Sandia contract, though only two companies have publicly said they will bid: Lockheed Martin and Fluor, which made a splash three years ago when it announced a teaming partnership with Boeing that has since dissolved, though Fluor remains interested in the contract. Other companies that are believed to be pursuing the opportunity include Bechtel, URS, Babcock & Wilcox, Northrop Grumman, Battelle, Jacobs Engineering, and SAIC. Honeywell, which currently manages the Kansas City Plant for the NNSA, is also likely to have some interest, especially in the non-nuclear production work that takes place at the lab. At least several other universities are also believed to have interest in the opportunity, including Texas A&M and the University of Texas, which teamed with Lockheed Martin on its unsuccessful run for the Los Alamos National Laboratory contract nearly a decade ago, as well as the University of New Mexico.
