Congress eyes lab waiver

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It appears unlikely the Los Alamos National Laboratory will receive any more award-term waivers.

If it does, Congress likely will have to get involved. 

A report in the Nuclear Weapons Materials Monitor indicates Senate appropriators have included language as part of their version of the Fiscal Year 2014 Energy and Water Appropriations Act that would require a “detailed explanation” of any changes to field office Performance Evaluation Reviews.

According to the Senate Appropriations Committee report accompanying the bill, “award term extensions create a long term financial liability for the federal government and should be awarded based on merit.

“The committee believes NNSA must provide an explanation if at-risk award fees are adjusted and award term extensions granted that differ from field office recommendations.”

Last year, the lab received a one-time waiver from the NNSA fee determining official — principal deputy administrator Neile Miller, who left the post at the end of June.

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 was 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, 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. LANS earned just 68 percent

Waddell’s letter stated that the “NNSA Fee Determining Official has nevertheless expressed a desire to award LANS 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.” 

Miller also granted a one-year waiver to Lawrence Livermore lab.

Miller adjusted Livermore’s fee in December, giving the lab contractor an extra $541,527 to help it meet the 80 percent mark. 

Miller told the trade publication,  “That is the flexibility I have as a Fee Determining Official and I believe when I do those determinations I’m taking into account not only what has gone on specifically that the site manager is referring to but sort of bigger picture and strategic objectives that NNSA has at that given site, and I have the fee that I determine reflect that,” Miller said.

According to the trade publication, the decisions drew concern from Congress, and from the Government Accountability Office. 

At the Nuclear Deterrence Summit in February, GAO Assistant Director Allison Bawden suggested that the inconsistent administration of contract incentives like the award term extensions could lead companies to “cherry-pick” certain incentives believed to be worth achieving and “counting on the fee determining official to see its wisdom” could erode the ability of field managers to make tough decisions.

“What kind of message do these actions send to potential bidders on future M&O contracts? Will they take the contract structures as seriously?” Bawden asked.

The trade publication report said, House Energy and Water Appropriations Subcommittee Chairman Rodney Frelinghuysen (R-N.J.) said the agency did itself a “tremendous disservice” by granting the award term extensions when he briefly raised the issue at a subcommittee hearing on DOE project management in March.

And  Sen. Dianne Feinstein (D-Calif.), who chairs the Senate Energy and Water Appropriations Subcommittee, called the decision “unbelievable” during a panel hearing in April. 

“Why would contracts be extended if people are not performing?” Feinstein asked.