GAO denies third protest of $22 billion contract to manage Y-12, Pantex

Y-12 National Security Complex Aerial View

Federal officials have denied the third protest by one of the two teams that unsuccessfully bid on a $22 billion contract to manage the Y-12 National Security Complex in Oak Ridge, pictured above, and Pantex Plant near Amarillo, Texas.

Note: This story was updated at 6:45 p.m.

Federal officials have denied the third protest by one of the two teams that unsuccessfully bid on a $22 billion contract to manage the Y-12 National Security Complex in Oak Ridge and Pantex Plant near Amarillo, Texas.

In the protest, Nuclear Production Partners LLC of Lynchburg, Va., had challenged a November decision by the National Nuclear Security Administration to reaffirm its earlier decision, announced in January 2013, to award the consolidated contract to Consolidated Nuclear Security LLC of Reston, Va.

On Thursday, the U.S. Government Accountability Office announced that it had denied the third protest. It’s the final GAO protest, but the case could be appealed to the U.S. Court of Federal Claims in Washington, D.C.

Statistically, that’s not likely; the GAO hears 2,500 protests per year, and the court has about 84. But there is a large amount of money at stake with this contract.

The GAO had upheld one part of an earlier NP2 protest and denied or dismissed three elements of a second.

This last protest challenged the adequacy of the corrective action taken by the NNSA after the GAO’s April 29 decision on the first protest, and the agency’s new selection decision. In the April 29 decision, the GAO said the NNSA had failed to meaningfully assess whether each bidding team’s proposed cost savings were, in fact, feasible.

In response, the NNSA amended its solicitation and sought additional cost savings information from the three bidding teams. After receiving the new information, the NNSA again awarded the contract to CNS in November, about 10 months after the selection was first announced.

“Today’s decision resolves NPP’s protest of the agency’s corrective action taken in response to our earlier decision,” said Ralph O. White, GAO managing associate general counsel for procurement law. “GAO concluded that the agency’s corrective action was consistent with the requirements of the Federal Acquisition Regulation and properly limited to address the specific defects in the prior source selection process. In addition, our decision rejected NPP’s various complaints about the substance of the agency’s evaluation and the source selection decision.”

The NP2 team is led by Babcock and Wilcox Technical Services Group Inc., and B&W issued a statement Thursday.

“Each of the NP2 protests raised issues that our team believed were valid,” said George Dudich, president of Babcock and Wilcox Technical Services Group, Inc. “While we are disappointed with the GAO decision, we will evaluate the decision and consider our options. The B&W-led teams currently in place at Y-12 and Pantex remain focused on operating both sites safely and securely.”

CNS, a team led by Bechtel National Inc., also issued a statement.

“We are pleased with the GAO’s decision to dismiss the latest protest of the NNSA’s contract award to Consolidated Nuclear Security,” the statement said. “Once we receive authorization from NNSA, we will resume the transition. We look forward to working with the employees of Pantex and Y-12 to ensure safe, secure, and effective delivery of these very critical missions.”

The transition had originally been scheduled to be complete by May 1, 2013, but was delayed due to the protests.

The five-year extendable contract could be worth up to $22.8 billion during a 10-year period. Besides the management and operation of Y-12 and Pantex, it could also include construction of the multi-billion-dollar Uranium Processing Facility at Y-12 and the potential to manage and operate the NNSA’s Savannah River Tritium Operations near Aiken, S.C.

The GAO has 100 days to decide on protests. Friday is the deadline for this latest one.

A public version of the decision is not yet available. Based on previous experience, though, it could be available within a week or so.

“Because our protest decision contains proprietary and source selection sensitive information, release of the decision, at this point, is limited to DOE/NNSA personnel and to outside counsel who have been admitted under the GAO protective order issued for these protests,” White said in the Thursday statement. “The parties have been directed to submit proposed redactions for the purpose of preparing a public version of the decision. GAO expects to publish a public version of the decision as soon as possible. When the public version of the decision is available, it will be posted to our website, www.gao.gov.”

B&W is now the lead management and operating contractor at Y-12 and Pantex. Y-12 is currently operated by B&W Y-12, a partnership of the Babcock and Wilcox Co. and Bechtel Corp. Meanwhile, Pantex is managed and operated by Babcock & Wilcox Technical Services Pantex LLC. Bechtel, which has operational headquarters in Reston, Va., is a partner on that project as well.

The B&W-led companies have held the Y-12 contract since 2000 and the Pantex contract since 2001.

In January 2013, federal officials said CNS had promised to save the federal government $3.27 billion during the next decade. They said the consolidated contract, the result of years of work, could save money in part by eliminating redundancies in such areas as human resources, purchasing, finance, and information technology.

The third bidding team, Integrated Nuclear Production Solutions LLC of Oak Ridge, has remained relatively quiet since the contract award was announced in January 2013 and an initial bid protest.

More information will be added as it becomes available.

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