The Department of Energy will not pick up the remaining options on Bechtel National-led Consolidated Nuclear Security’s contract to manage the Y-12 National Security Complex and the Pantex Plant, which now will expire after Sept. 30, 2021.
Consolidated Nuclear Security (CNS) will leave three years worth of options on the table. The contract is worth roughly $2 billion annually. CNS fell well short of the 80% at-risk fee-take it needed to earn in 2019 to trigger the next two-year option on the pact, earning only about 70%, or some $28 million.
Kicking CNS out begins a juggling act for the DoE’s semi-autonomous National Nuclear Security Administration (NNSA). The nuclear-weapons agency now has a year and a quarter to compete a replacement contract, or contracts, for the two sites, and it must do so without disrupting construction of the Uranium Processing Facility that Bechtel is building at Y-12 under a subcontract to the prime.
One industry source said Tuesday that the NNSA might split construction of the Uranium Processing Facility out of the prime contract and let either Bechtel or CNS continue managing construction of that facility, which in the mid-2020s will become the manufacturing hub for nuclear weapon secondary stages. Right now, that work happens in the World War II-vintage Building 9212.
Likewise, it was not clear whether the NNSA planned to keep Y-12 and Pantex under one contract — though a spokesperson said operating the sites under one contract has been “very positive.”
“At this time, NNSA isn’t able to provide information about our strategy for competing the future contract,” the spokesperson for the semi-autonomous DoE nuclear weapons agency wrote in an email Tuesday evening. “Over the duration of this contract, the consolidation of the two sites has provided NNSA with very positive results, beyond the cost savings’ benefits realized.”
Earlier last decade, the NNSA decided to combine the previously separate management and operations contract for Y-12, which makes the uranium-fueled secondary stages of nuclear weapons, and Pantex, the central assembly-and-disassembly site where all nuclear weapons get routine maintenance and major upgrades.
The agency’s aim was to save money by combining administrative functions such as payroll at the two sites. After a competition that wrapped up in 2014, CNS snatched the work at Y-12 and Pantex from a pair of incumbents led by rival BWX Technologies [BWXT], which subsequently protested the award to the Bechtel National-led team that also includes Leidos [LDOS], Northrop Grumman [NOC] and subcontractor Booz Allen Hamilton [BAH].
The Government Accountability Office denied the protest. CNS took over the two sites, though it subsequently had trouble delivering the promised cost savings. The NNSA maintains it has saved money with the combined contract, but it has not quantified the savings.
It marks yet another potential exit for Bechtel from a nuclear-weapons site. Since 2018, Bechtel-led teams or subsidiaries have lost prime contracts at the NNSA’s Los Alamos National Laboratory and Naval Nuclear Laboratories.
“The NNSA’s decision is disappointing, but it does not overshadow the important work performed by the patriots that come to work every day at our sites,” a CNS spokesperson wrote in an email. “CNS will review the NNSA’s feedback and drive to improve our performance. We remain focused on delivering our vital mission for the nation, safely and securely, while addressing challenges and continuing to build an enduring future for Pantex and Y-12.”