March 17, 2014

Y-12/PANTEX Q&As FOCUS ON FEE CONCERNS

By ExchangeMonitor

It’s been no secret that some industry officials have been unhappy with the proposed fee structure for the NNSA’s Y-12/Pantex contract merger, and several of the questions received by the procurement’s Source Evaluation Board reflect concerns about the fee. The agency released dozens of questions and answers late last week, including several that took veiled shots at the recent extensions authorized for incumbent B&W-led teams at Y-12 and Pantex. “With the NNSA having reduced the Total Available Fee that will be represented in the new contract; are they also negotiating a reduction of the Total Available Fee offerred [sic] the incumbent contractors for option years awarded prior to the new contract?” one questioner asked, noting that the total combined fee for the Y-12 and Pantex M&O contracts in FY2011 was $87.7 million. Bidders are allowed to propose a fixed/incentive fee between $17.3 and $46.2 million during the first year of the combined contract, and they can match the fixed/incentive fee by earning money from cost savings.

A second questioner asked whether it was “NNSA’s intention to negotiate a reduction in fee for this extension as the pending Y-12/Pantex M&O competition includes the potential for a significant reduction in fee for the next 10 year contract. It appears no reduction in fee was negotiated for the first one year contract extension. Will the negotiated fee be made public information?” The SEB gave no hints as to whether it was considering changes to the fee. It said the comment about the fee for the contract extension “does not pertain to this solicitation.” In response to a third question, the NNSA said that alternate fee structures “may not be considered” in proposals.

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