Lab received NNSA waiver

Evaluation > LANL received 68 percent of overall at-risk fee

By John Severance

Saturday, January 12, 2013 at 8:00 pm (Updated: January 15, 9:37 am)

There is more to the National Nuclear Security Administration’s 2012 performance evaluation of the Los Alamos National Laboratory than meets the eye.

According to documents obtained by the Los Alamos Monitor, the lab received a one-time waiver from the NNSA fee determining official — principal deputy administrator Neile Miller.

In a letter from former Los Alamos Site Office head Kevin Smith to Miller, the award term (one-year contract extension) originally was not granted. But at the bottom of the letter, the no is scratched out with a notation, “Yes. Contingent on LANS letter attached.”

That LANS letter was written by DOE Senior Procurement Executive Joseph Waddell to lab director Charlie McMillan, dated on Dec. 7. The letter stated that Los Alamos National Security had been granted a waiver for the FY-12 NNSA fee by the Fee Determining Official (Miller).

According to the letter, LANS met two of the three criteria but earned less than 80 percent overall at-risk fees.

Waddell’s letter stated that the “NNSA Fee Determining Official has nevertheless expressed a desire to award LANS the award in recognition of LANS’ acceptance of full responsibility and accountability for problems that have arisen under the Nuclear Materials Safeguards and Security Upgrades Phase II Project and for moving aggressively to correct the issues.

“In order to facilitate the FDO’s wishes, I hereby provide a one-time waiver to the restrictions of clause H-13 so that the clause remains operable and the award term remains available for the FDO to grant for the FY-12 performance evaluation notwithstanding LANS is being awarded $31,624,479 (or 68 percent) of overall at-risk fee.”

NNSA spokesperson Josh McConaha said, “we’ll let the text of the document stand as explanation.”

The NMSSUP project was intended as an upgrade to the existing fences, cameras, sensors, and other detection and denial systems around facilities at TA-55, which houses the Plutonium Facility. The project was suspended on Oct. 23.

Originally, the system was targeted to cost $213 million, but cost overruns increased the project to $254 million, according to a memo written by McMillan to employees on Dec. 21. That total was later revised down to $240 million after LANS agreed to make a $10 million payment to the government in non-reimbursable, non-taxpayer funds to settle project costs.

In the performance evaluation, the fee determining official also had withheld an additional $2,600,000 Management Fee Adjustment (reduction) beyond the base recommendations from former Los Alamos Site Office manager Kevin Smith.

In McMillan’s memo to employees on Dec. 21, the lab director wrote this, “The award term this year is significant. In its letter, NNSA cited LANS’ ‘full responsibility and accountability’ and ‘aggressive’ actions to correct issues facing the Nuclear Materials Safety and Security Upgrade Project (NMSSUP), as among the reasons for the award term decision,” McMillan said in the December memo.

“The LANS contract now continues through FY 2018. We continue to have opportunities to earn award terms that could extend the contract to 2026. In my view, the stability and consistency afforded by a long contract term is extremely important to the success of the lab. I am pleased that we have added another year to this stability.”

McMillan, who said the lab worked through a $400 million shortfall, told employees the lab scored 80 percent and the Los Alamos National Security, LLC, was awarded another year on its contract.

Out of a possible total of $74.5 million, NNSA awarded LANS a combined total of $59.6 million in fees for executing more than $2.2 billion in work for the nation in FY 2012.

“To be sure, our performance evaluation is only one measure of our success,” McMillan wrote in the memo. “I have always maintained that if we do the right thing for our customers and the nation, the award term and fee will take care of themselves.

“They are, however, a documented evaluation of how the government values our work. This year, we have very plain evidence of how issues in safety or project execution can overshadow a very successful year when measured in other ways."