LANL contract up for bid after 2017

SANTA FE – The National Nuclear Safety Administration has informed Congress that the Los Alamos National Laboratory contract will be put out for competitive bidding sometime after 2017, the Journal has learned.

It would be only the second time the contact has been put out to bid since the lab was created to develop the atomic bomb during World War II.

LANL’s most recent federal government performance evaluation is better than last year’s, but not good enough for the lab’s private-sector operator to earn the award of an extra year on its contract, the lab’s director informed LANL workers this week.

And continuation of Los Alamos National Security LLC holding the contract was contingent on it being granted the “award term.”

LANL director Charles McMillan said in his Thursday email to lab employees that he was “deeply disappointed that we did not meet NNSA’s expectations in a manner sufficient to net another year of award term” on the contract that runs through fiscal year 2017.

“Nevertheless, the federal government has offered Los Alamos National Security, LLC (LANS) an extension to the contract to manage the Laboratory beyond FY17; I will provide additional details about that at a later date after there has been more discussion between the federal government and LANS,” McMillan said in a copy of his message obtained by the Journal.

An extension as described by McMillan is not the same thing as the merit-based award of an additional contract year that LANS missed out on this year. It’s unclear from McMillan’s statement whether the extension he mentioned is intended as merely a holding pattern but, under its contract, LANS needed to earn an award year this time around to keep the contract going.

The contract with LANS provides for vacating the contract, awarded in 2006, if the consortium doesn’t earn a series of one-year term awards. Last year, the Department of Energy – NNSA’s parent organization – warned that LANS was under the gun to earn an award term for its work in fiscal 2015.

“Having failed to earn contract term extensions for fiscal years 2013 and 2014,” and with the revocation of a previous extension, “LANS must earn (an) award term in every future performance period to keep the contract in force beyond fiscal year 2017,” said a statement provided by the DOE last December.

On Friday, an NNSA spokeswoman said, “We do not comment on ongoing assessments.”

Contract over $2 billion

LANS – a consortium that includes the Bechtel corporation, the University of California, Babcock and Wilcox, and URS Energy and Construction – won the LANL contract in 2006. The contract now amounts to about $2.2 billion a year, plus a fee based on performance.

The University of California, on its own, had previously held the Los Alamos contract since the lab’s beginnings developing the atomic bomb during World War II. The contract was put out for competition about a decade ago after a series of security and property management problems at the lab.

Last year, LANS also didn’t earn an “award term” and even lost a year it had previously been granted as NNSA hit the lab hard for failures that led to a radioactive leak at the nation’s nuclear waste repository near Carlsbad from a drum packaged at Los Alamos. The Waste Isolation Pilot Plant has been shut down since the leak in February 2014.

The federal government cut the performance-based management fee for LANS by nearly 90 percent, down to $6.25 million, for fiscal 2014. That compared with $59 million-plus paid to the LANS consortium the previous two years. No information on the 2015 fee award has been released.

McMillan’s Thursday message to employees said that, in order to earn an award year, the lab had to score better than “satisfactory” in all of six evaluation categories. “We did not accomplish this,” McMillan said, despite getting high scores in four of the six areas.

NNSA rated LANS only satisfactory for operations and infrastructure, the same category in which the lab got a crucial “unsatisfactory” grade last year. LANS this year was rated “very good” in two categories – its missions to manage nuclear weapons and reduce global nuclear security threats – and excellent in two others, missions for science technology and engineering, and for a “DOE and Strategic Partnership Project.” The NNSA rated LANS’s leadership as “good.”

Despite his disappointment over failing to net an award term, McMillan wrote, “I am pleased to note that our federal partners once again acknowledged our strong performance in the areas of mission and science. We continue to provide strong value to the national security missions and Los Alamos continues to be regarded highly for the quality of its science.

‘Shortcomings’ noted

“Our federal partners made it clear that shortcomings in our work planning and work controls related to safety events, project performance, cybersecurity, the earned value management system (EVMS) and continued weaknesses in criticality safety all weighed heavily in the evaluation of our performance. These are areas we must – and will – improve going forward,” said McMillan.

He also wrote, “I remain committed to the long-term sustainability of the Laboratory and to each of you. I am scheduling an all-employee meeting shortly after the New Year to hear and address your thoughts, concerns, and questions. Los Alamos will continue to have a valued role in protecting the nation and the world. It is incumbent upon us during the remainder of the contract period to deliver mission success through operational effectiveness and scientific excellence.”

Jay Coghlan of the Nuclear Watch New Mexico watchdog group said the situation as described by McMillan, with LANS getting an extension despite failing to earn an award term, was “deja vu all over again,” similar to a later-rescinded waiver that granted LANS an award year for fiscal 2012, although it hadn’t met all the performance criteria. “It seems awfully premature for director McMillan to indicate there’s going to be a contract extension before it’s actually finalized by the U.S. government,” Coghlan said. “He’s putting the cart before the horse, maybe putting on a happy face for his employees before they leave for Christmas.”

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