The Department of Energy is continuing to take action in response to last month’s embarrassing security breach at the Y-12 National Security Complex, scrapping its plans to combine protective force management of Y-12 and the Pantex Plant and issuing a potentially devastating “show cause notice” to Y-12 contractor B&W Y-12. The notice, which was first reported by the Knoxville News Sentinel, was issued Aug. 10 and requires B&W Y-12 to demonstrate why it should retain the management and operating contract at Y-12. The company’s contract expires Sept. 30, but two three-month options could extend the contract through March of next year. The notice comes at a potentially devastating time for B&W, which is leading one of three teams bidding for its combined Y-12/Pantex management and operating contract. B&W has already removed three senior executives in response to the July 28 security breach, including General Manager Darrel Kohlhorst and Deputy General Manager Bill Klemm, and installed B&W executive Chuck Spencer as the site’s acting GM. In a message to Y-12 employees yesterday, Spencer urged the workforce to remain vigilant. “We are in a tough spot as a company given the recent security event, and we will have to work together as a team to regain the confidence of our stakeholders,” Spencer said. “There will be more assessments, inquiries, and press releases in our future. We can’t let those things or the natural tendency to become deflated after an incident like this, distract us. Instead, we must become more focused than ever before, because another lapse in focus would be devastating. So I’m asking all of you to take ownership of your company. Don’t allow unsatisfactory conditions to exist in your area. Search out your problems and vulnerabilities and address them.”
In another big change yesterday, the NNSA said it would incorporate protective force work at Y-12 and Pantex back into the ongoing Y-12/Pantex management and operating contract procurement, essentially abandoning its plans to combine security work at the sites along with other DOE work in Oak Ridge. According to a notice posted to the M&O procurement website yesterday, the NNSA will amend the Y-12/Pantex Request for Proposals in the next two weeks to include the protective force work and extend the due date for revised proposals. “PF services may not be subcontracted,” the NNSA said in the announcement, fueling speculation among industry officials that the amendment would hew closely to a draft RFP released last year that included the protective force work. The NNSA took the work out of the final RFP in response to pressure from security contractor WSI, one of the companies at the center of the emerging security scandal. “As the Secretary has made clear, it was a completely unacceptable breach of security, and an important wake up call for our entire complex,” a senior NNSA official told NW&M Monitor. “The severity of the failure of leadership at Y-12 demands swift, strong and decisive action and this is a strong step.”
The NNSA also said it would amend the RFP for its protective force contract to “remove the NNSA portion” of the contract, presumably to clarify that the procurement will continue for remaining work at Oak Ridge National Laboratory and other Department of Energy sites in Oak Ridge. Both moves are sure to shake up the M&O competition as the teams scramble to shore up protective force work in new proposals. It remains to be seen, however, what will happen to the WSI-B&W team that had planned to bid for the combined protective force contract—both whether WSI may land on the B&W-led team bidding for the M&O contract or whether either company can survive the security gaffe. It also remains to be seen how much teams bidding for the M&O contract will be able to revise their proposals beyond addressing protective force work, which could be especially important as B&W and team members URS, Northrop Grumman and Honeywell potentially revaluate their bid in the wake of the security breach. At the very least, the team will have to address Kohlhorst’s role as key personnel on the B&W-led team.
