GAO denies, dismisses second protest of Y-12, Pantex contract award

The U.S. Government Accountability Office on Tuesday denied or dismissed three elements of a protest filed in June by one of the two teams that lost a competition earlier this year to manage two nuclear weapons plants in Tennessee and Texas, a contract that could be worth up to $22.8 billion.

The bid protest was filed on June 17 by Nuclear Production Partners LLC, or NP2, a team led by Babcock and Wilcox Co. NP2 was one of three bidding teams that sought to manage and operate the Y-12 National Security Complex in Oak Ridge and the Pantex Plant near Amarillo, Texas.

The GAO had 100 days to respond to the June protest, and it issued its decision one day before a Sept. 25 deadline. The decision announced Tuesday dismissed as premature allegations regarding discussions and proposal revisions, denied an assertion that the National Nuclear Security Administration had to further amend the award solicitation, and dismissed as untimely NP2’s arguments regarding the application of Federal Acquisition Regulation’s requirements for cost realism analysis.

It wasn’t immediately clear what would happen next. The transition to a new contractor had originally been scheduled to be complete by May 1 of this year, but the protests have put the transition on hold.

The Babcock and Wilcox Co., or B&W, responded to the GAO’s decision on Tuesday evening.

“With the agency maintaining that most of NP2’s protest is premature, we look forward to NNSA’s next steps in the process, knowing the strength of our proposal and team,” said George Dudich, president of Babcock and Wilcox Technical Services Group Inc. “In the meantime, we remain focused on operating Y-12 and Pantex safely and securely until a final decision on the contract is made.”

It was the second protest filed by NP2, of Lynchburg, Va. On April 29, the GAO upheld one part of an earlier pair of protests filed by NP2 and Integrated Nuclear Production Solutions LLC of Oak Ridge. In that decision, the GAO raised questions about proposed savings and recommended that the procurement be re-opened and more information requested from the three bidding teams about their proposed cost savings. The GAO also recommended that the relative size of each team’s proposed cost savings be evaluated. The winning team, Consolidated Nuclear Security LLC, or CNS, had promised to save $3.27 billion during the next decade.

In May, the NNSA announced that it would request more information from the three teams. In its statement, B&W said it had submitted the additional information requested by the NNSA after part of the first protest was sustained.

The bid protests followed a January announcement by the NNSA that it had awarded a five-year extendable contract valued at up to $22.8 billion to CNS to manage and operate Y-12 and Pantex.

In the decision announced Tuesday, the GAO said NP2 had most objected, in its second protest, to various aspects of the NNSA’s ongoing corrective action, primarily arguing that the agency should conduct broader discussions, permit more extensive proposal revisions, and/or amend the solicitation to reflect changes occurring due to the passage of time. NP2 also renewed its prior argument that the agency must comply with the FAR’s requirements for cost realism analysis, the GAO said.

Here is the GAO digest of the decision announced Tuesday:

1. Dismissed as premature NP2s’ allegations challenging the adequacy of discussions and the limitations on proposal revisions in connection with the agency’s ongoing source selection process.
2. Denied the team’s assertion that the agency is required to amend the solicitation to reflect various changes that have occurred due to the passage of time.
3. Said a protest alleging that the proposed cost savings, which the solicitation stated would be evaluated under the technical/management evaluation factors, should be subject to the Federal Acquisition Regulation’s cost realism requirements is not timely filed where terms of the solicitation advised offerors that only offerors’ fees would be used as the evaluated cost for purposes of the best value determination.

The NNSA first published the contract solicitation in December 2011. In addition to managing and operating Y-12 and Pantex, the winning team is expected to manage construction of the Uranium Processing Facility at Y-12 and could manage tritium operations at the Savannah River Site near Aiken, S.C.

CNS includes Bechtel National Inc., Lockheed Martin Services Inc., ATK Launch Systems Inc., and SOC LLC.

Babcock and Wilcox is the current lead managing and operating contractor at Y-12 and Pantex. Joining it on the NP2 team are URS, Northrop Grumman, and Honeywell.

The Integrated Nuclear Production Solutions team includes Jacobs Engineering Group Inc. and Fluor Federal Services Inc.

Read the decision here.

More information will be added as it becomes available.

Note: This story was last updated at 12:40 a.m. Sept. 25.