Todd Jacobson
NS&D Monitor
8/29/2014
KANSAS CITY, Mo.—The Department of Energy appears to be on the verge of making a decision on whether or not to compete the Kansas City Plant contract, but Energy Secretary Ernest Moniz gave little sense of the path forward in comments here late last week. Speaking on the sidelines of a dedication of the National Nuclear Security Administration’s new Kansas City Plant, Moniz declined to offer any specifics when asked about DOE’s contract plans, but he confirmed that the issue was among the Department’s priorities. In fact, he noted that the night before the dedication, he and NNSA Administrator Frank Klotz were discussing plans for the contract. “We’re not going to discuss specifics of it but typically we would try to make a decision a year in advance. That’s coming up,” Moniz told NS&D Monitor. “Secondly, obviously performance is a major consideration.”
Incumbent Kansas City Plant contractor Honeywell Federal Manufacturing and Technologies has long been one of the NNSA’s most reliable contractors, and it facilitated a move into the new facility that was completed a month early and approximately $16 million under budget while continuing to meet 99.9 percent of scheduled deliverables. DOE, however, issued a Request for Information in June that appeared tailored toward figuring out how to generate interest in the contract. Honeywell’s contract to run the plant expires in September 2015.
‘We’re Just Working Through the Process’
Responses to the RFI were due July 8, and Kansas City Site Office Manager Mark Holecek confirmed that a team was still analyzing future options for the contract. “Right now we’re just working through the process,” he said. “There is an extend-compete decision that’s coming up. We have a team that’s looking at the various factors and they’re going to make a recommendation to the secretary and we’re going to make a decision from there. Beyond that there’s not much I can tell you.”
When the contract was last competed in 2000, Honeywell won without any competition and has been one of the highest performing contractors in the weapons complex over the last decade. Honeywell led all contractors by earning 94 percent of its at-risk fee, or $28.2 million out of $30 million that was available. It also earned another $15.7 million for non-NNSA work. “If I were contemplating coming after this contract I would think long and hard about spending my [bid and proposal] dollars on it,” Honeywell FM&T President Chris Gentile told NS&D Monitor last week. Nonetheless, Gentile said Honeywell was preparing as if it would have to defend its turf. “We are preparing as if we’re going to have a competition,” he said. “We’re spending revenue to prepare ourselves to compete this contract.”
Honeywell: ‘We’re Confident’
While it’s unclear what companies might step up to compete, industry officials have suggested that top Pentagon contractors like Lockheed Martin, Boeing, Northrop Grumman, General Dynamics, and Raytheon could show interest, as well as IBM and Babcock & Wilcox. Bidders could be lured by the lucrative fee to run the plant, which is about 7 percent—the highest in the weapons complex.
Unseating Honeywell could prove difficult, however, which is a message the incumbent is trying to get across. “We’re confident,” Gentile said. “We feel like we have done a really nice job on this contract and that the government should have a lot of faith in what we would commit and what we would offer. And there are clauses [in federal procurement regulations] that would say if you can’t reasonably expect that you’re going to get better performance why would you compete the contract.”
