Todd Jacobson
NS&D Monitor
8/1/2014
Los Alamos National Laboratory contractor Los Alamos National Security, LLC, could soon be on the hook for cost overruns on major projects, according to documents obtained by NS&D Monitor. According to a March 25-28 review of the Transuranic Waste Facility project, obtained through the Freedom of Information Act, NNSA’s Office of Acquisition and Project Management was in negotiations with LANS to create a “SubCLIN,” or sub-Contract Line Item Number, in its contract to “establish terms and conditions for a new cost incentive where the contractor will lose fee for overruns on capital line item projects.” The SubCLIN would impact the TWF project, which is believed to have recently achieved Critical Decision-3, allowing construction to start. The NNSA declined to comment this week, and Los Alamos National Laboratory did not respond to a request for comment.
It’s unclear whether the negotiations have been completed, but such a strategy would codify the approach taken by the NNSA in the wake of Los Alamos’ Nuclear Materials Safeguards and Security Upgrades Project. When that project had to be stalled in December 2012 because it was going to breach its baseline, LANS agreed to pay $10 million—softening the blow of what was projected to be a $41 million cost overrun. The project was finished earlier this year at a cost of $243.2 million, about $1 million less than its $244.2 million cost cap.
In recent years, the NNSA has taken a harder stance against schedule and cost overruns, docking the fee of contractors working on at least four big projects, including the Los Alamos security upgrade project. Notably, the NNSA cut the fee for MOX contractor Shaw AREVA MOX Services for cost overruns and delays on the project, and former Y-12 contractor B&W Y-12 was penalized for major design problems on the Uranium Processing Facility. NNSA has also cut fee for the Waste Solidification Building at the Savannah River Site. “I don’t know why we have not done it in the past but our contractors are taking notice so now they are more focused on understanding what our expectations are,” NNSA Office of Acquisition and Project Management Director Bob Raines said last year.
