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Details emerge on Sandia competition

Copyright © 2016 Albuquerque Journal

WASHINGTON — Sandia National Laboratories employees would retain their current pensions – or something similar – under any new Sandia management contract, and the federal official in charge of national laboratories says whoever is chosen to run the lab will be required to emphasize contracting with Albuquerque-area small businesses.

Meanwhile, the University of New Mexico says it will announce Tuesday who it plans to team up with to seek the contract to manage the sprawling nuclear weapons complex located on Kirtland Air Force Base.

The new details and developments emerged Friday after the National Nuclear Security Administration’s release of its final request for proposals to manage Sandia, which has a $2.9 billion annual budget and 10,500 employees.

The NNSA oversees the nation’s weapons laboratories, including Sandia and Los Alamos. NNSA Administrator Frank G. Klotz wrote to members of New Mexico’s congressional delegation last week as the agency issued a final request for proposals to manage Sandia.

“New Mexico and its local communities are absolutely vital to the Department of Energy’s National Nuclear Security Administration,” Klotz wrote. “We have long recognized the importance of contractor workforce retention, strong relationships with local small businesses, continued technology transfer activities, strong regional university partnerships, and support of STEM (science, technology, engineering and math) education contributions.”

When the NNSA released the request for proposals Wednesday, it also announced that at least 19 entities, including major defense contractors and universities, expressed interest in winning all or part of the multi-billion dollar contract. In releasing its request for proposals, the NNSA said it “will conduct a full and open competition” for the contract, which has a four-month transition phase starting in May 2017 and a five-year base management period with options for up to five additional years.

The Department of Energy first announced in 2011 that it planned to put Sandia’s managament out to bid but then granted a series of extensions to the lab’s current manager, defense giant Lockheed Martin. A new Sandia contract must be in place by April 30, 2017 under the current schedule.

Companies and organizations that have expressed at least preliminary interest in the contract include major national defense contractors such as Lockheed, Boeing, Battelle and Fluor, as well as institutions of higher learning, including the University of Texas, Texas A&M University, the University of Arizona and UNM.

UNM officials are planning a news conference on Tuesday to discuss the university’s plans with respect to submitting a Sandia bid.

“The University of New Mexico is part of a team that feels it can help enhance and improve the operations at Sandia National Labs,” said UNM spokesman Steve Carr in an email to the Journal . “The team will announce its plans and partners at a news conference this Tuesday.”


In his letter to Sen. Martin Heinrich and other Democrats in New Mexico congressional delegation, Klotz said the request for bids to run Sandia contains “certain restrictions on existing benefit changes.”

“Incumbent employees will remain in their existing pension plans, or comparable successor plans if continuation of the existing plans is not practicable, pursuant to the pension plan eligibility requirements and applicable law,” Klotz wrote.

The NNSA administrator also wrote that a bidder’s plan to enhance “small business participation” is one of three criteria assessed as part of NNSA’s evaluation process.

Klotz noted that Sandia spends 39 percent of its contract-related dollars in New Mexico, resulting in more than $250 million in contracts to small businesses in the state.

“NNSA would expect any successor contractor to take advantage of these longstanding relationships,” Klotz wrote.

Klotz noted that the consortium that manages Los Alamos National Laboratory voluntarily gives a 5 percent pricing preference to local businesses supplying goods or services to the labs as part of contracts of $5 million dollars or higher.

“The successful (Sandia) contractor may include a similar preference,” Klotz wrote, adding that any successful bidder on the Sandia contract will be required to “assume existing contractual commercial, regulatory or similar obligations” of the current contract held by Sandia Corp., a wholly-owned subsidiary of Lockheed Martin.

Rep. Michelle Lujan Grisham, D-N.M., applauded NNSA’s specific language related to small business in the contract.

“I appreciate that the NNSA listened to my input and expressed a desire to build more economic incentives into the next contract to run Sandia National Laboratories,” she said. “While I understand the focus will be on Sandia’s national security mission, I hope the entities that are interested in the contract will step up and offer creative ideas for increasing the lab’s economic footprint in New Mexico. I want to ensure that the next contractor will be held accountable for meeting concrete goals for creating jobs and investing in New Mexico small businesses.”

Tyler Przybylek, a former chief counsel to the National Nuclear Security Administration during the administration of President George W. Bush and now a private contracting consultant in Washington, said the NNSA’s request for proposals “shows its support for small business” by separating fees paid to small business contractors from the fee that the federal government will pay the eventual winner of the overall contract.

“NNSA showed its support for small business by including a specific evaluation factor for small business, by excluding fees paid to a small business team member from the fee pool earned by the contractor, and by highlighting support for business with New Mexico firms and universities in the community outreach provision,” he said.

Pryzbylek also said the final request for proposals seems to reflect concerns raised by potential bidders during the drafting of the document that it “unfairly favored the incumbent” contract holder Lockheed Martin.

“The final RFP is much improved and will support robust competition in part because NNSA solicited input from concerned firms, listened to the input and improved the final RFP where NNSA found appropriate,” he said, adding that the final documents seemed to de-emphasize the need for intensely specific experience related to nuclear weapons work that only an incumbent manager such as Lockheed Martin could possess.

“The final RFP, in the past performance criterion, offers a broader definition of relevant past performance for those situations,” he said. “Some of that work is not done anywhere else.”

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