Todd Jacobson
NS&D Monitor
8/1/2014
Language in the Senate Appropriations Committee version of the Fiscal Year 2015 Energy and Water Appropriations Act unveiled last week includes a subtle warning to the National Nuclear Security Administration about future contract consolidation across the weapons complex. The committee was previously skeptical of the NNSA’s consolidation of the Y-12/Pantex management and operating contract, and the language appears to be directed at the possible consolidation of the Kansas City Plant contract with portions of other contracts, particularly at Sandia National Laboratories.
In the report accompanying the bill, the committee reminded NNSA to adhere to Federal Acquisition Regulations as it examines options for competing the Kansas City Plant contract. “NNSA procedures require that the contracting officer review each M&O contract at appropriate intervals and at least once every 5 years, and he or she should determine whether meaningful improvement in performance or cost might reasonably be achieved when making a final decision to compete the existing contract,” the committee said.
‘We Want to Make Sure There is Some Cost Savings and Value’
A Congressional staffer told NS&D Monitor that the panel was concerned about the value of consolidating the contracts, and that it remained skeptical about the savings planned as part of the Y-12/Pantex consolidation. Bechtel-led Consolidated Nuclear Security proposed $3.27 billion in cost savings over the 10-year life of the Y-12/Pantex contract. “If you’ve got someone who has operated in a very cost effective manner, you need to make sure you’re going to achieve some cost savings if you’re recompeting,” the staffer said. “Because recompeting is costly. If we recompete this we want to make sure there is some cost savings and value.”
In a Request for Information issued in June, the NNSA sought insight from potential bidders for the Kansas City Plant contract but made no mention of potentially consolidating the contract, as it had in a 2012 RFI. “Without a definitive, ‘We’re not going to do it,’ we want to understand what it looks like,’ ”
the staffer said. “We still have concerns about what happened at Pantex and Y-12. I’m not at all convinced that’s going to yield the savings people think.”
Fed Price Tag of Y-12/Pantex Competition $3.3 Million
The NNSA spent $3.3 million to compete the combined Y-12/Pantex management and operating contracts, according to a cost-benefit analysis sent by the agency to Congress earlier this year. The report was mandated by Congress in the Fiscal Year 2013 and 2014 Defense Authorization bills due to questions from lawmakers about the cost savings expected from the contract merger, and largely defends the NNSA’s decision to combine the contracts. NS&D Monitor obtained the report this week. Congress also tasked the Government Accountability Office to review the NNSA’s report, and that review is ongoing.
The NNSA said the “single contract award further strengthens NNSA’s ability to move toward a fully integrated and interdependent enterprise and enhances mission performance, reduces costs, strengthens partnerships and improves stakeholder confidence. This integration improves mission capability while aligning with best business practices to achieve more mission requirements within available funding resources.” The report adds, “Savings generated will be reinvested in the nuclear security enterprise (NSE) to improve safety, security, quality and infrastructure.”
Cost Effectiveness of Competition ‘Offset’ Concerns About Workforce Uncertainty
According to the report, the acquisition phase of the procurement that began in October 2008 cost $2.1 million, which included the travel, contract support services, and efficiency, merger and benchmarking studies. The remainder of the costs included travel during the competition phase of the procurement, but excludes federal salaries. Consolidated Nuclear Security took over management of the sites July 1. “As with any major contract competition there is uncertainty for the workforce, and this was possibly exacerbated by multiple protests in this case; however, the cost effectiveness of conducting the competition offset these concerns,” the NNSA said. “All mission activities and deliverables were met.”
