Courtesy of NNSA/DOE
Management of federal nuclear-weapons processing operations at the Pantex site in Texas (above) and at the Y-12 complex in Tennessee (below) will transfer to a Bechtel-led team by May.
Courtesy of NNSA/DOE

Babcock & Wilcox has lost its contracts to manage and operate the federal Y-12 National Security Complex in Oak Ridge, Tenn., and the Pantex Plant near Amarillo, Texas, just months after three activists managed to breach security at the Tennesee nuclear research site.

A consortium led by Bechtel will take over operations and management of the sites, beginning on May 1, under a five-year contract announced on Jan. 8 by officials of the U.S. Energy Dept.'s National Nuclear Security Administration (NNSA).

NNSA did not specify the amount of the contract, which includes an option to be extended for an additional five-year period.

Previously, NNSA had two separate contracts with two different B&W-led consortiums to manage and operate the Y-12 site and Pantex. B&W has managed the sites for 12 years, with Bechtel part of both teams. Total annual funding for both sites was $1.7 billion, according to B&W.

NNSA said the move to consolidate the operations and management of Y-12 and Pantex under one consortium, with a single contract to manage both sites, will save $3.27 billion in federal dollars over the next decade.

“[It] will further strengthen NNSA’s ability to move toward a fully integrated and interdependent enterprise which will enhance mission performance, reduce costs, strengthen partnerships and improve stakeholder confidence,” the agency said.

Y-12 is a major center for uranium processing, and Pantex is where nuclear warheads are assembled and partially disassembled after being retired from the U.S. arsenal.

NNSA said the Y-12 security breach last July at what is considered the “Fort Knox of uranium” was a factor that was considered in awarding the contract to the Bechtel group, but it was not a determining one. Bechtel also had been part of the site management team at the time.

The security breach was the focus of congressional hearings and federal investigations. The security contractor was changed soon after the incident, with B&W taking over some responsibility. Both the firm and NNSA have said security has been greatly improved.

Further, Bechtel has faced criticism of its management of design and construction issues at the $12.3-billion nuclear-waste processing plant at DOE's Hanford site in Washington state, notified by the agency last fall that it would receive only half of a possible $6.3-million contract-award fee.

DOE said the fee recognized nuclear safety improvements at the Hanford project but also reflected remaining site safety problems. At the time, Bechtel said it would not challenge the decision.

Bechtel's government-services arm is also a part of a consortium that manages DOE's Los Alamos and Lawrence Livermore national labs.

For the new contract at Pantex and Y-12, Bechtel's team includes Lockheed Martin Services Inc., defense firm ATK Launch Systems Inc. and security specialist SOC.

Lockheed Martin is the prime management contractor for the agency's Sandia National Laboratories.

Teams led by B&W and Fluor Corp. also bid for the new contract, although NNSA did not release the names of the other bidders.

“We are disappointed, as we believe our proposal was a very strong choice for moving closer to NNSA's vision of a consolidated nuclear security enterprise," the firm said in a statement. "We will carefully evaluate information received during NNSA's debriefing process and consider the options available to us within the procurement process.”

B&W will be debriefed on the contract change and has the option to appeal the contract decision.

A Fluor spokesman says its team included Jacobs Engineering Group and Oak Ridge-based engineer Pro2Serve as an integrated subcontractor.

NNSA could extend the contract with the Bechtel consortium to manage the Savannah River Tritium Operations at the Savannah River site in South Carolina, a consolidation the federal government says will save even more money.

The Savannah River site currently is managed by a consortium of Fluor Corp., Honeywell and Newport News Nuclear.

If NNSA exercises that option, the Bechtel-Lockheed team will include subcontractors General Atomics and Booz Allen Hamilton Inc. as merger and transformation specialist.

Management at the Pantex and Y-12 sites will begin a four-month transition period immediately, NNSA said.

In the teleconference, NNSA said 95% of the workers are expected to stay in place at the facilities. Babcock & Wilcox has said there are 4,715 employees at the Y-12 site and 3,211 employees at the Pantex site.