A change in corporate parents was enough to quickly undo the 2016 award for the management and operations contract for the Nevada National Security Site. The primary issue was the corresponding shift in past performance portfolios, an industry source told NS&D Monitor this week in the wake of the second and presumably final contract award for the facility.
The National Nuclear Security Administration on May 12 awarded the M&O contract to Mission Support and Test Services LLC (MSTS), a partnership of Honeywell International, Jacobs Engineering Group, and Stoller Newport News Nuclear.
Just last August, the semiautonomous Department of Energy agency awarded the contract to Lockheed Martin subsidiary Nevada Site Science Support and Technologies Corp. (NVS3T), but revoked it days later after learning the company had been transferred to Leidos as part of Lockheed’s divestiture of its Information Systems & Global Solutions branch.
The NNSA’s withdrawal of the award was a surprise to the bidders, the source said: “I don’t think any of the five teams saw it coming.”
NVS3T, a partnership between Leidos, Fluor Federal Services, and consulting firm Longenecker & Associates, was to receive a contract worth up to $5 billion over 10 years for the 1,360-square-mile facility that conducts U.S. nuclear stockpile support and nonproliferation operations, along with testing and training.
“There was clearly sensitivity at NNSA to differences between having Lockheed as the owner, and Leidos,” the individual said. Although the bidding team itself did not change – only the parent company – the NNSA’s use of past performance as a major criterion in evaluating contract bids likely led to a different result the second time around.
The source said the change in both companies’ contract portfolios due to the acquisition led to a different past performance record: “For example, the Sandia contract, and all of the past performance, stayed with Lockheed. And virtually the rest of Lockheed’s DOE portfolio – the Hanford Mission Support contract, the piece of the Y-12/Pantex contract – those went over as part of the Leidos acquisition.”
Sandia Corp., a wholly owned Lockheed subsidiary, received the highest marks among the NNSA’s nuclear weapons labs in the agency’s fiscal 2016 performance evaluations, earning an “excellent” rating and 91 percent of its award fee. Still, Lockheed lost the contract to a Honeywell subsidiary as of May 1 after Sandia Corp. was fined over $4 million in 2015 for illegally using congressional funds to lobbying related to the deal.
Meanwhile, Consolidated Nuclear Security earned 77 percent of its fiscal 2016 award fee for management of the Pantex Plant in Texas and Y-12 site in Tennessee, up from 57 percent its prior evaluation. The contractor would need to reach 80 percent after its third year under the contract in order to stay on past the initial performance term.
Additionally, DOE last year decided to withhold payment of Mission Support Alliance’s award fee – 89 percent in fiscal 2015 – while awaiting a resolution over a past payment allowability dispute with the contractor that provides support services for DOE’s Hanford Site in Washington state.
NVS3T last year filed a complaint in the U.S. Court of Federal Claims against the withdrawal of the initial Nevada site award, which led to petitions to intervene by two other bidders: MSTS and Nuclear Security & Technology LLC, a partnership of Northrop Grumman Technical Services, AECOM subsidiary URS Federal Services, and CH2M Hill Constructors Inc.
There were five total bids for the contract, the NNSA said at the time. The other two were separate teams led by BWX Technologies and Bechtel Corp., the source said.
The NNSA then reconsidered each of its original bids for a new award. While the agency’s evaluation process didn’t change, it asked contractors for clarifications and allowed restructuring of their initial bids, including changing team structures and updating past performance.
Past performance, then, seemed to determine the new award. The three bidding teams that lost both times are teammates on management and operations of the Los Alamos National Laboratory in New Mexico: Bechtel, BWXT, and AECOM (part of Northrop’s team in this bid). “I think they all got dinged for past performance because of LANS, and so there was some separation created that way,” the source said.
The NNSA decided last year against granting any additional award terms past fiscal 2018 for Los Alamos National Security because the lab’s performance fell short in its fiscal 2015 rating.
Additionally, inappropriately packaged waste from Los Alamos was linked to a February 2014 radiation release that shut down DOE’s Waste Isolation Pilot Plant for nearly three years. Afterward, the department split off the legacy transuranic waste cleanup oversight from the NNSA to DOE’s Office of Environmental Management, and bid out the cleanup currently conducted by LANS through the end of September.
Meanwhile, Honeywell is on a winning streak in the weapons complex, in 2015 retaining its contract at the Kansas City National Security Campus, last December winning the management contract at the Sandia National Laboratories, and now moving into the Nevada site. “That’s a very significant run,” the source said, noting this “continues the broader trend that incumbents can have a difficult time winning.”
A second industry source said only that “it’s interesting that they’ve awarded the last three contracts to the same contractor.”
Honeywell has consistently received top marks from the NNSA on its performance evaluations; for fiscal 2016 it received 92 percent of its award fee, and in fiscal 2015 it earned 94 percent, the highest in the complex.
“With a history of success managing the Department of Energy’s Federal Manufacturing & Technology Kansas City operations and the recent contract to lead the Sandia National Laboratories, Honeywell and its partners are well positioned to continue the government’s mission and continue to build a culture of excellence throughout the Nevada operation,” Honeywell spokesman Steve Brecken said in an emailed statement.
The Nevada site is currently run by National Security Technologies, a team of Northrop Grumman, AECOM, CH2M, and BWX Technologies.
The industry source said DOE debriefs on the contract award have not yet been scheduled but are likely within the next two weeks. After that, losing bidders will have 10 days to file a protest with the Government Accountability Office. It is still unclear whether any bidders will protest, according to the source, who noted the Northrop-led incumbent is likely to file, in part because it would keep the contractor on the job longer while the matter is resolved.
BWXT might also protest because of its role in the existing contract in addition to its independent bid; Leidos may consider the move because “they’ve clearly shown a willingness to go to court in the past”; but Bechtel is unlikely to file a protest, the individual said. Another industry source agreed that Bechtel is unlikely to protest, as “they probably have a recognition about their place in the market.”
BWXT declined to comment on its bidding teammates and the contract award.
Leidos spokeswoman Rashi Ratan said last week that “it would be inappropriate for us to discuss further specifics around this contract.”
