The prime contractors for civilian nuclear-weapon sites get no “lasting benefit” from their corporate parent companies, the interests of which may conflict with national security, a small group of National Nuclear Security Administration employees wrote in a report dated September 2022.

At the heart of the conflict, the six-member panel wrote in its report, is the longstanding practice of paying nuclear-weapon management and operations contractors — which are often jointly owned — an annual fee for completing an agency-authored list of milestones.

The National Nuclear Security Administration (NNSA) should ditch this award fee contracting model and run its sites, to the extent that it can, as Federally Funded Research and Development Centers (FFRDCs), the six member Enhanced Mission Delivery Initiative wrote in its report,

Evolving the Nuclear Security Enterprise

“The award/performance fee often led to a misalignment of the senior leadership and the corporate board in their desires to score well” on NNSA’s annual evaluation of site milestones, the panel wrote in its report, a copy of which Defense Daily’s affiliate publication, Weapons Complex Morning Briefing, reviewed. “The value of continuing this model is unclear if substantial cost savings are not realized and if the corporate parents are not delivering a substantive benefit.”

One of the very few benefits of the award fee model, the report said, was that it drew more bids for the agency’s big site management contracts. Otherwise, the report said, the model, which puts pressure on contractors to hit milestones every year, is inferior to the FFRDC model, which historically has given contractors five years, or more, or firm money before the agency gives another contractor a chance to manage the site.

The Enhanced Mission Delivery Initiative panel made 18 recommendations in total to its overseer, James McConnell, the associate principal deputy administrator of the National Nuclear Security Administration (NNSA). 

McConnell, a longtime Department of Energy employee, previously ran the agency’s now-defunct infrastructure and operations office. In August, NNSA erased the office as part of a reorganization of its procurement bureaucracy.

The panel’s report gathered opinions from about 250 interviews with current and former senior leaders among NNSA’s federal and contractor workforces, according to the report. NNSA has a roughly $20 billion budget, most of which goes to the contractors managing the agency’s eight major nuclear weapons labs, plants and test site.

A version of this story first appeared in Defense Daily affiliate publication Weapons Complex Morning Briefing.