Morning Briefing - July 11, 2018
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July 11, 2018

NNSA Rolling On With CNS Contract as Senate Presses For More Insight Into Deal

By ExchangeMonitor

As House and Senate lawmakers this week debate whether to tighten congressional scrutiny of the National Nuclear Security Administration’s (NNSA) weapons production contract, the agency is pressing ahead on all cylinders with the deal, which was extended for two years just this spring.

The Senate’s 2019 National Defense Authorization Act, passed in June, mandates that the Government Accountability Office examine how much money the NNSA has saved by combining management of the Pantex Plant and Y-12 National Security Complex into a single contract held by the Bechtel-led Consolidated National Security (CNS).

The House’s 2019 National Defense Authorization Act did not call for investigating CNS’ contract. The two chambers are set to begin a bicameral conference Wednesday aimed at producing a compromise bill for President Donald Trump to sign.

Months before debate on the bill started, the agency on March 29 quietly picked up a two-year option to keep CNS on the job through June 30, 2021. The option was picked up nearly a year before the contract’s base period is set to end on June 30, 2019. Consolidated Nuclear Security could earn up to $110 million or so in fees over the two-year option period, according to the contract.

The total possible fee-take covers roughly $80 million in performance incentive fees and nearly $30 million in cost-savings incentive fees, which the contractor earns if it saves the government a certain amount of money in each year of the option period.

Including two more options in addition to the one just exercised, the CNS prime contract would run through March 31, 2024.

The NNSA thought combining the previously separate Y-12 and Pantex contracts would eliminate redundancies such as financial reporting and administration, saving the government hundreds of millions of dollars over the life of the contract. The agency has not disclosed how much money CNS saved the government in the base period of the contract.