NNSA’S UPF PROJECT DIRECTOR DETAILS CONTRACTING PLANS FOR PROJECT

John Eschenberg, the new Federal Project Director for the Uranium Processing Facility, said the multi-billion-dollar project will be broken up into several pieces over the next decade in order to ease management of the project. The “chunking” of the project, which Eschenberg also referred to as “smart parsing” in a speech this week at the Energy Facility Contractors Group annual meeting, will begin with work to relocate Bear Creek Road, the main thoroughfare through the Y-12 National Security Complex, in order to make room for UPF. The first of “seven or eight pieces” of the project, the road relocation will be managed by the Army Corps of Engineers, Eschenberg said. Other pieces include site preparation, the structure of the building, the installation of process equipment, and the completion of the facility. “The wisdom there is it’s very small, it’s very discreet,” Eschenberg said. “The owner has a high level of visibility in what’s being expensed and you can’t shuffle costs forward. … The other advantage is it allows the owner to use different means of contracting.”

He also said the strategy should help build confidence in the project, which has jumped in cost over the last decade. Current estimates for the project indicate it could cost as much as $6.5 billion. Eschenberg said this week that the project has reached 76 percent design maturity, and will reach 90 percent by the fall. “It also allows us to over time begin to restore confidence in fed building,” Eschenberg said. “That’s more paramount to our success. What that means is that now that we’ve got a number of small victories and we’re proving along the way we can deliver such that when the project’s funding needs hit a peak of $750 million, which is going to tax the system, we can show a track record of success.”

Road Relocation Natural Fit For Army Corps

Eschenberg said the relocation of Bear Creek Road was a natural fit for the Army Corps of Engineers, and an agreement between the NNSA and the Corps was signed recently giving the Corps authority over management of that portion of the project. “This is all road work and dirt moving,” he said. “They move dirt as well as anyone.” What is expected to be a $20 million effort will begin in the fall, Eschenberg said, and is expected to take between 14 and 18 months. He said the Corps is ready to move out with solicitations, and he will give the go-ahead once Deputy Secretary of Energy Dan Poneman reaffirms the scope of the project and signs off on Critical Decision-1 and the project’s Fiscal Year 2013 funding picture becomes more clear. The Administration has asked Congress for $340 million in FY2013 to accelerate the project, which is expected to be completed by 2019 and up and running by 2023.

Eschenberg said that the site preparation will be handled differently than the road relocation, reflecting the strategy to analyze all facets of the project for the best contracting approach. “Step-wise as we work through this, I’m going to apply the same sort of overlying philosophy: How do I get the best value for the government, how do I apply some kind of innovative contracting regime? And thirdly I’ve got to be mindful of the small business objectives,” Eschenberg told NW&M Monitor on the sidelines of the meeting.

He said that the contractor that wins the ongoing competition for the management and operating contract of Y-12 and the Pantex Plant would handle the biggest portion of the project, the nuclear portion of the build. The construction of UPF was included as a separate Contract Line Item Number for the contract separate of management and operating the plants. “For the nuclear part of the build we’re going to rely on the new contractor. That will be their work,” Eschenberg told NW&M Monitor. “There may be portions of the work in the out-years that are spare packages that can be smartly culled out. For example, some of the support facilities. Can we sublet some of those to small businesses? Can we sublet some of those as fixed-price instead of cost-reimbursable work? The idea is that it going to be a very active kind of a dialogue, a very dynamic environment. It’s not that we’re going to say, ‘Here, we’re going to give this to the M&O and you go off and build this project for us.’“

A ‘Protest on a Platter’?

Eschenberg’s comments raised some eyebrows among industry officials at the EFCOG meeting because they appear to indicate that the government already has an approach in mind with how to contract out UPF, which it asked bidders to propose as part of bids for the management and operating contract at the Y-12 National Security Complex and the Pantex Plant. The agency included construction of UPF as a separate Contract Line Item Number, retaining the right to pull UPF out of the contract, and asked bidders to offer an approach to building the facility, key personnel to manage the work, and an approach to shifting risk from the government to the contractor. Eschenberg’s plan to parse out the work appeared to suggest that the government already had an approach in mind, which some bidders were concerned could prejudice the evaluation of proposals. “It’s a protest on a platter,” one industry official said. “He was talking pretty definitively about parsing it out and exactly how he was going to do it, how it would be broken up. He conveyed a sense that he’s going to drive it in a certain way. He may very well have read all the proposals and they all may be consistent, but it’s kind of odd to have a situation where you’re asking people to propose an innovative, aggressive, risk-shifting approach and then stand up in public before it’s announced on exactly what you’re going to do as the Federal Project Director.” —Todd Jacobson