Newspaper article News Sentinel

Cost Overruns Delay Upgrades

Newspaper article News Sentinel

Cost Overruns Delay Upgrades

Article excerpt

"What are you going to do? Write a bid that says, 'Given all the political (bull) we won't be able to meet the savings expectations?'"

Neile Miller

a former NNSA director

Consolidating the management of two critical sites, including one in Tennessee, where nuclear weapons are assembled would save taxpayers up to $3.27 billion over a decade, the National Nuclear Security Administration (NNSA) promised in 2013.

Hundreds of millions of dollars in savings were to be spent on the modernization of the nuclear weapons production complex, and billions of dollars were to revert to the public treasury. But four years after the consolidated contract was won by Consolidated Nuclear Security (CNS) LLC, a group of corporations led by Bechtel National Inc., there's not much to celebrate, government documents and reports show.

In particular, much of the promised savings haven't shown up, while the annual federal costs of running and overseeing the Y-12 site in Tennessee and the Pantex plant in Texas - have risen more than 30 percent from nearly $1.85 billion to $2.48 billion. Still, the government awarded the contractor extra profits for cost savings.

As a result, big spending at the two sites threatens to eat up a sizable chunk of the new money the Trump administration wants to spend on the U.S. nuclear arsenal, including increasing the number of types of weapons, casting doubt on whether Trump's ambitious nuclear agenda can be completed as planned.

The U.S. nuclear weapons program depends on Y-12, located at Oak Ridge, Tennessee, for the highly enriched uranium components that fuel a nuclear blast. Every bomb that the U.S. builds during the three-decade, $1.2 trillion modernization of its nuclear arsenal will be assembled at Pantex Plant in Amarillo, Texas.

The history of the thwarted saving goal is tangled. Federal auditors found that the evaluation process - which parsed bids from some of the nation's largest defense contractors - bore peculiarities that helped Bechtel's group win. And a powerful lever to force CNS to achieve as much savings as possible was quietly removed from the contract last September, making it easier for the firm and its partners to win lucrative contract extensions.

In effect, the government has rewarded CNS for failing to show it could achieve promised economies, while preserving its opportunity to collect up to $660 million in profit over a 10-year period.

Key lawmakers and congressional staff questioned from the start how savings from personnel reductions could be accomplished at the two sites as nuclear weapons work on a three-decade-long trillion-dollar modernization program ramped up.

"Did the left hand talk to the right hand?" asked Gordon Adams, a former White House national security budget official, about the process.

Amid the turmoil caused by the contract consolidation, many workers at the plants complained in a confidential staff survey that they feel profit has been prioritized over safety. They were startled to learn of lost medical benefits at the same time they say their work has become more dangerous due to staffing vacancies.

Contractors get bonus profits

Bechtel and its partners haven't suffered serious consequences so far from falling short of the initial federal goals. Instead, they have earned extra federally-paid profits of $74.2 million from mid-2014 through 2016, including $36.9 million in cost savings bonuses.

Asked for comment, spokespeople for Bechtel, CNS and the NNSA said the consortium has produced efficiencies that saved considerable sums from what the program might otherwise have cost, without a consolidation, amid growing demand for work on nuclear weapons at the plants.

Here's how CNS got the work at Pantex and Y-12:

In 2010, the National Nuclear Security Administration - which was straining to control costs -- decided to explore the potential savings from merging the two sites under one contractor. …

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