A bid protest by a Bechtel Corp.-led team that challenged the award of a $10-billion, 10-year plutonium production cleanup contract at the federal Hanford nuclear site in Washington state awarded to a team formerly led by AECOM was rejected by the Government Accountability Office, which publicly released its ruling on May 13.
GAO, the federal watchdog agency reporting to Congress, said the U.S.Energy Dept. was justified in picking the more expensive but technically superior bid.
The ruling comes as DOE announced on May 14 that it had awarded a separate, much-anticipated Hanford contract valued at about $13 billion over ten years to a team led by BWXT Technical Services and Fluor Corp.
The indefinite-delivery, indefinite-quantity contract would cover cleanup and management of the nuclear site's huge network of aging underground waste tanks. Other team members are INTERA Inc. and DBD Inc.
According to the GAO decision on the disputed contract, the solicitation allowed for a best-value tradeoff and while the bids from the two groups were similar generally, DOE decided that the AECOM team had stronger key personnel and a better technical and management approach.
Called the Central Plateau Cleanup Co., (CPC), the team includes Fluor Federal Services and Atkins Nuclear Secured. Bechtel National’s team, Project W Restoration, includes Tetra Tech and Energy Solutions.
Andrew Wittmann, lead industry sector analyst at Baird Equity Research, said in a May 16 note, that the two contract wins for Fluor, which reversed in February its 2019-announced plan ito sell its government services unit, are "a source of reliable future free-cash-flow and revenue."
Bechtel also still has a major presence at Hanford, as the builder of its $17-billion vitrification plant, which is set to commission by 2023 to begin turning some portion of the site's low-level radioactive waste into glassified logs.
AECOM spun off its government services unit last year to private equity owners, which launched it in February as an independent company called Amentum. DOE procurement officials said the sale "would have no material effect of the evaluation of the CPC proposal."
The Amentum team is set to replace a team led by CH2M, now a unit of Jacobs, that has held the plutonium cleanup contract for more than a decade. It is set to expire in September.
Amentum and Jacobs are believed to have also competed for the just-awarded tank farm management contract.
Analyst Wittmann that a Jacobs' bid protest of the award "appears likely," contending that the firm had "expressed higher priority/importance for picking up this tanks contracts after losing its incumbency position" on the central plateau plutonium cleanup contract. The analyst added that the firm's plan "to become a major Tier 1 nuclear remediation provider through its acquisition of CH2M suffers a notable setback."
Jamie Cook, managing director at Credit Suisse, said the firm has "opportunities to replace it with new awards in the near term."
Jacobs says it is awaiting a debriefing from DOE officials and will evaluate the information related to a possible protest.
Jacobs said it was just awarded a contract by an affiliate of the U.K.'s government's Nuclear Decommissioning Authority to study elease of radioactivity from irradiated graphite tested from reactor cores at British nuclear power plants, and noted that its critical missions solutions (CMS) unit, which includes its work in global nuclear, automotive, aerospace, telecommunications and defense sectors and for the U.S. intelligence community, did well in second-quarter results, with total backlog at $9.1 billion, a 5% year-over-year increase.
The firm said the ongoing COVID-19 pandemic will have a short-term impact on the unit's business but that underlying structural demand for services remains strong.
DOE's proposal evaluator said that key personnel was the “major discriminator” for the award to CPC, noting the proposal team's stronger qualifications and experience. Also cited were its technical and management approach and integrated schedule,
The evaluator also said the two offers were not close in non-price factors despite the same overall ratings.
Bechtel claimed DOE unreasonably assigned three weaknesses to its proposal under the technical/management approach and that the cost evaluation also was unreasonable.
GAO, which does not reevaluate proposals but examines the record to determine whether the judgment was reasonable and made according to evaluation criteria, found Bechtel’s argument to be without merit.
Under current COVID-19 restrictions, work at the nearly 560-sq-mile Hanford site now is limited to essential mission critical workers, but DOE and contractors working there are developing a plan for the eventual return of more than 11,000 workers to the site, said Brian Vance, manager of DOE’s Richland, Wash., office.
“I want to assure each of you that the Department and our contractors will use a deliberate, data‐driven process for a phased return to the physical work locations in the right way at the right time,” Vance said in an early May letter to all Hanford site employees.
DOE and its contractors plan a phased return based on state, local and national COVID-19 guidance, and the capability of the local healthcare system and personal protection equipment and sanitizer supply chain, he said.
Added Liability Concerns
In other DOE-related actions, GAO found in a new report that the department faces more than $500 billion in environmental liabilities associated with the cleanup of hazardous waste contamination and long-term management of its U.S. sites associated with past decades of nuclear weapons production, but it has not yet made plans to assess the effects of climate change on sites or to mitigate its consequences.
DOE’s Office of Legacy Management is responsible for long-term management, which includes surveillance and maintenance, and such actions as treating residual groundwater contamination, at the 100 sites under its control. Another 52 sites will be added to its oversight by 2050.
GAO recommended that DOE develop agreements and procedures for the possibility of added cleanup at those sites, which are turned over to the Legacy Management unit once active remediation is completed. It also recommended that DOE develop plans to assess and mitigate the effects of climate change on the sites.