Security breach costs B&W Y-12 $12.2 million

B&W Y-12, the company that manages and operates the Y-12 National Security Complex, lost $12.2 million in award fees because of the July 28 security breach, a federal report said.

B&W earned $35.9 million, about 59 percent of its available fee of $60.9 million, the National Nuclear Security Administration said in a fiscal year 2012 performance evaluation of Babcock and Wilcox Technical Services Y-12 LLC.

The company lost 100 percent of its potential security-related fee, and there was also a $10 million “negative overall management fee adjustment,” the NNSA said.

The NNSA said B&W Y-12, also known as Babcock and Wilcox Technical Services Y-12 LLC, earned a “very good” rating in program, a “satisfactory” rating in operations, and a “very good” in institutional management and business.

The fiscal year ended Sept. 30.

The security breach occurred two months earlier when three anti-nuclear weapons activists allegedly hiked over a ridge north of Y-12, cut through fences in a high-security area, and splashed human blood and spray-painted slogans on the Highly Enriched Uranium Materials Facility, where bomb-grade uranium is stored.

The NNSA announced Tuesday that a new company, Consolidated Nuclear Security LLC, or CNS, would start managing and operating Y-12 and the Pantex Plant near Amarillo, Texas, on May 1. The team includes Bechtel National and Lockheed Martin.

Work on that consolidated contract began several years ago, before the security breach.

Officials at the National Nuclear Security Administration said the security breach was given “due consideration” in the competition to award the consolidated Y-12/Pantex contract, but it was not the determining factor.

NNSA officials have declined to say how many teams bid on the consolidated contract, and they also wouldn’t name the bidding teams.

But B&W released a statement Tuesday suggesting it had been a member of one of the teams. B&W said it was disappointed that its team was not selected to lead the management and operating, or M&O, contract.

More information will be added as it becomes available.