The agency that manages the nation's nuclear weapons is changing the way it does business, and the change could have a significant impact on Savannah River Site contractors and operations.
The National Nuclear Security Administration announced Tuesday that it has selected a contractor to manage and operate the consolidated contracts for nuclear production operations – and the decision could eventually see tritium operations taken from current contractor Savannah River Nuclear Solutions.
Promised to save $3.27 billion in taxpayer dollars over the next decade, NNSA selected Consolidated Nuclear Security LLC to be the management and operating contractor for the Y-12 National Security Complex in Oak Ridge, Tenn., and the Pantex Plant near Amarillo, Texas.
The contract also includes construction project management of the Uranium Processing Facility at the Y-12 National Security Complex and a future option to oversee “Savannah River Tritium Operations” at SRS.
Speaking Tuesday, Neile L. Miller, principal deputy administrator for NNSA, stressed there is no immediate change to take place at SRS and that any potential change is unrelated to the performance of SRNS and will not happen in the first year of this contract.
“First of all, I don't see any of these as punitive in nature,” Miller said Tuesday. “It's not, 'If you don't do these things, we will hit you over the head with this.' This is much more about us (the NNSA) than it is about the contractor. There is an awful lot of analysis and understanding on our part that is needed.”
The change in contract style, with one company overseeing multiple nuclear production operations, is a move to save money by consolidating management and administrative staff, as well as accessing economies of scale.
The consolidation is expected to reduce staffing numbers at Y-12 and Pantex as support staff functions will be handled centrally, according to NNSA. However, CNS expects to offer positions to 95 percent of current staff.
Comprised of Bechtel National, Lockheed Martin Services, ATK Launch Systems and SOC, CNS will begin a four-month transition immediately at Y-12 and Pantex.
Additionally, CNS will use subcontractors Booz Allen Hamilton as merger and transformation specialist, and General Atomics for Savannah River Tritium Operations, if that option is exercised by NNSA in the future.
“Our nuclear production capabilities are critical to our national security, and this contract puts NNSA in a position to improve mission delivery by generating significant savings that will be reinvested to improve safety, security, quality and infrastructure,” said NNSA Administrator Thomas D'Agostino. “This award will have a lasting impact on NNSA for years to come. It is the culmination of years of hard work focused on continuously improving the way we operate, saving taxpayer dollars and aligning ourselves for the future.”
The CNS contract has built-in demands that the contracted cost savings be met. They must operate the facilities to a high standard and record upward of $500M in savings in the first three years to be eligible for a contract extension.
“We found a strong, experienced partner in CNS,” said Miller. “Their focus on continuously improving while driving for cost efficiencies helps us plan for the future while ensuring that we're delivering on our commitments to our partners.”
CNS will take over NNSA's mission activities under the new contract starting May 1. The base term of the contract is five years, with options that may extend the term up to an additional five years. To be eligible for continued performance beyond the fifth year, CNS will be required to deliver on promises made in its proposal regarding efficiencies and to continue to meet mission and other contract requirements consistently.
If NNSA's option for Savannah River Tritium Operations is exercised at the end of year one, the contract includes a total available fee of approximately $446 million to manage the three sites for DOE and NNSA work, depending on CNS' quality of performance.
CNS may also earn up to an additional $263 million as their share of savings, though CNS cannot share any savings related to employee benefits.
CNS will also be responsible for designing and overseeing construction of the new Uranium Processing Facility at Y-12, though NNSA has not determined who will ultimately build the facility.
Together, Pantex, Y-12 and Savannah River are integral parts of NNSA's nuclear production efforts, delivering products and services focused on surveillance and maintenance of the nation's nuclear weapon stockpile, NNSA said in a release Tuesday.
Additionally, CNS will be responsible for the integration of production activities across the Nuclear Security Enterprise.
CNS reportedly beat out two other bidders for the contract, including one from SRNS' majority partner Fluor.