By George Lobsenz

Wackenhut Corp., saying the company has failed to keep up with major new security demands in the nuclear industry, last week announced “a new strategic direction” under which it will seek to work more closely with nuclear plant operators to provide more effective protection for commercial reactors.

At the same time, the company, the largest security contractor for U.S. nuclear plant operators, suggested nuclear utilities also have to accept that they will have to spend more if they want to meet heightened security requirements at their reactors. Specifically, in an Oct. 26 press release, Wackenhut said that in pursuing “mutual planning” and “shared responsibilities” with utilities, it will be seeking “a full recognition and reconciliation of costs and service trade-offs.”

Wackenhut was even more explicit about the financial issue in an undated 17-page presentation on its new strategy obtained by sister publication The Energy Daily.

“Over the past decade, the drive to lower [nuclear power] station costs has forced security vendors to compete by trimming…labor cost, overhead and profit,” the presentation says. “We are now ‘done to the bone.’

“Today’s pricing and cost structure cannot support the delivery of world-class security solutions expected by today’s regulators or station executives.”

Interestingly, much the same criticism has been made by nuclear watchdog groups, who say nuclear utilities have squeezed their security contractors to the point that they cannot significantly upgrade reactor protection.

“This isn’t just a Wackenhut problem,” Pete Stockton, senior investigator for the Project on Government Oversight, a leading nuclear security watchdog group, told The Energy Daily Tuesday. “We don’t think it’s totally their fault.

“It’s the [nuclear plant] licensees who drive this train. They come back [to the security contractors] and say we don’t have enough money. They simply don’t want to spend the money.”

Wackenhut said the new approach for its nuclear services division was the result of an “in-depth assessment” of those operations begun 10 months ago with a change in executive leadership.

However, the new strategy follows hard on the heels of a huge embarrassment for Wackenhut at the Peach Bottom nuclear plant, where the operator, Exelon Corp., fired Wackenhut after revelations earlier this month that Wackenhut guards were sleeping on the job. Exelon, the nation’s largest nuclear operator, also announced at that time that it was reviewing Wackenhut contracts at its other reactors.

Wackenhut alluded to the Peach Bottom incident in its Oct. 26 press release detailing its new strategy, with the company saying the episode “confirmed” that change is clearly needed.

“We knew we had to take this new strategic direction several months ago when the results of our industry assessment were first evaluated,” Eric Wilson, president of Wackenhut Nuclear Services, said in a statement. “The recent incident of inattentiveness at Peach Bottom as well as impending [security] rule changes by the Nuclear Regulatory Commission only confirm that this is the right course of action.”

Wilson said his company’s assessment had determined that Wackenhut and other security contractors were not keeping up with the increased protection demands at nuclear plants resulting from the raft of new security requirements issued by the NRC following the September 2001 terrorist attacks in New York City and at the Pentagon.

He said while Wackenhut and other contractors had responded to the new requirements by increasing the size of their guard forces, that did not effectively address the much broader range of threats now faced by nuclear plant operators.

“We have witnessed and experienced a growing gap between the needs of the nuclear industry and the delivery of contract security services–both those we provide and those of our competitors,” Wilson said.

“Our business has unfortunately evolved into a staff-augmentation model which, based upon our new assessment, can no longer adequately support the delivery of world-class security solutions as expected by today’s nuclear plant executives and regulators.”

Wackenhut said that while minimum regulatory requirements were always met, nuclear plant security prior to the 9/11 terrorist attacks was viewed as an “ancillary” service provided by a relatively small guard force that was not well-integrated with plant operations.

But with the new post-9/11 security rules, the company said, guard forces not only have to be bigger, but need to be better aligned with plant operations to assure NRC requirements are met.

Thus, Wilson said Wackenhut’s new strategy called for moving away from traditional “cost-plus-fee” contracting approaches to a more collaborative “strategic alliance” model in which Wackenhut would work with utilities much as nuclear equipment vendors do to solve plant problems.

To reflect the new approach, the company said Wackenhut Nuclear Services will be renamed as Regulated Security Solutions.

Wackenhut also served notice in its presentation on the new strategy that it will seek more money from nuclear utilities to improve security.

“We will honor our current business obligations through the expiration of existing contracts,” the presentation said. “At that time we will introduce a new pricing model designed to support the delivery of top-quality regulated security solutions.

“Our hope is that all of our customers will recognize that providing security solutions at a nuclear generation level of quality and control requires an alliance framework, adequate resources and a steady hand,” the presentation added. “These are the customers we are looking to partner with.”

Wackenhut also is a major security contractor in the Energy Department’s nuclear weapons complex, where it also is struggling along with other security contractors to meet tougher post-9/11 security requirements. As at nuclear power plants, Wackenhut and other DoE security contractors typically have expanded guard forces to meet tougher security requirements, which has proved a very expensive solution.