The National Nuclear Security Administration did itself a “tremendous disservice” by granting award term extensions to contractors that run Los Alamos and Lawrence Livermore National Laboratories even though the contractors did not meet requirements to trigger the extensions, a senior Government Accountability Office official said yesterday at the Nuclear Deterrence Summit. GAO Assistant Director Allison Bawden said the “inconsistent” administration of the contracts raises questions, not only for existing NNSA contracts that employ award term measures but also for a new cost-savings based contract that was awarded for the combined management of Y-12/Pantex last month but is under protest.
Bawden suggested that the inconsistent administration of contract incentives could lead companies to “cherry-pick” certain incentives they feel are worth achieving and “counting on the fee determining official to see its wisdom” and could erode the ability of field managers to make tough decisions. “What kind of message do these actions send to potential bidders on future M&O contracts? Will they take the contract structures as seriously?” Bawden said. The contracts of Los Alamos National Security, LLC, and Lawrence Livermore National Security, LLC, required the contractors to meet a handful of performance measures and earn at least 80 percent of the at-risk fee that makes up its contract. Neither contractor met the 80 percent threshold, but acting NNSA Administrator Neile Miller used her discretion as the Fee Determining Official to grant award term extensions to both LLCs.
Award term measures like those found in the Los Alamos and Lawrence Livermore contracts have been used as performance incentives at the NNSA for more than a decade, and the agency’s new Y-12/Pantex contract requires a contractor to meet cost savings targets to be eligible for the second half of what could be a 10-year contract. “Is NNSA prepared to quickly recompete these contracts if planned efficiencies are not achieved?” Bawden said. “The decisions with respect to LANS and LLNS from earlier this year create significant doubt. NNSA must be willing to live with the contracts it designs and signs. If it is not, then there is a problem with the contract vehicle that must be addressed. Inconsistent implementation is either a symptom of poor design or of a lack of will.”
