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Coalition Of LANL Communities Board Voices Deep Concern Over RFP For Lab Management Contract

on August 13, 2017 - 10:19am

Los Alamos County Councilor Chris Chandler chats with Santa Fe Mayor Javier Gonzales prior to the Regional Coalition of LANL Communities Board meeting Friday in Santa Fe. Photo by Maire O'Neill/ladailypost.com

From left, Jack Jekowski, RCLC board members, Taos County Commissioner Mark Gallegos, Taos Councilor Darien Fernandez and Espanola Mayor Alice Lucero. Photo by Maire O'Neill/ladailypost.com

 

By MAIRE O'NEILL
Los Alamos Daily Post

The Draft Solicitation for the Los Alamos National Laboratory Site Management and Operating Contract as presently proposed has generated expressions of alarm among members of the Regional Coalition of LANL Communities who voiced their concerns at a meeting of their Board of Directors Friday in Santa Fe.

The Coalition, which was founded in 2011, is comprised of Los Alamos, Rio Arriba, Taos and Santa Fe Counties as well as the Cities of Santa Fe and Espanola, the Town of Taos, and Ohkay Owingeh and Taos Pueblos. Los Alamos County is represented by Councilor Chris Chandler who is Secretary of the Board of Directors.

Board members wrote to the National Nuclear Security Administration (NNSA) in July expressing concern that contract language in the Draft RFP is a “great deviation from previous acquisitions and the current contract”.

“Outright, we are deeply concerned with the direction this acquisition has taken from previous LANL contract iterations and believe it to be set on an unfavorable path if left unchanged,” the letter stated.

Coalition Board members said the Draft RFP completely disregards LANL’s community engagement and leadership, which they call a slight to their communities, representative organizations and a “turn for the worst on collaborative, strong and participatory leadership from NNSA and its contractors”. They said the past 20 years have demonstrated that contractually mandated commitment to the community is a critical success factor to achieve broad-based community support for LANL operations. Their fear is that without contractually mandated community commitment, there is a risk of reverting to what they call the negative aspects of pre-1997 LANL activities.

The Board has asked NNSA for an expanded, scored and evaluated Community Commitment Plan to be enforced during the tenure of the next prime contractor because of the Lab’s location in one of the most challenged economies in the country with some of the poorest counties in the nation designated as host communities to LANL employees. Existing contract language states that with “the regional dominance of the Laboratory, a strong, vibrant regional economy is vital to long-term Laboratory operations and to the morale of LANL’s workforce”. The Board has asked NNSA to provide a specific plan for community support and assign a small point value to a community commitment criterion in the Final RFP.

Board members also are anxious to have a requirement in the Draft RFP that all existing contracts, agreements and memoranda of understanding between the current contractor and state/local government entities be continued as ongoing efforts of the next contractor.

Of particular concern to the Board is the absence of a necessary commitment to small business or the use of subcontractors in the operational aspects of the Lab. The Board said it feels this could be damaging to the local economy because many subcontractors operate very small and disadvantaged businesses in Small Business Administration HUBzone areas and calculate their business opportunities based on possible subcontracts at LANL. The Board asked NNSA to include a Small Business Subcontracting Plan with local subcontracting goals with a 5 percent or greater preference for contractors located in Northern New Mexico.

Attracting and retaining world-class and next generation workforce while retirement eligibility and retirement rates are high at the Lab is another concern of the Board.

“NNSA-required stability and certainty for current LANL workforce will offer Lab employees more reason to retain their current position during a period of transition. LANL traditionally has higher benefits available to its staff in order to retain the best and brightest employees. If the retirement benefits are any less attractive than the current standards, such a change will exacerbate the departure of employees while also inhibiting LANL’s ability to recruit and retain quality replacements. This will only serve to compound the amount of retirements, already occurring at high volumes, and will be magnified at the time of this transition based on current projections,” the letter to NNSA states.

The Board believes the one-percent performance fee threshold instead of three percent creates an alarming amount of risk for potential solicitors for the contract with little value added to the work accomplished. It fears a lower threshold of possible fee will mean that fewer, if any solicitors will respond to the RFP.

The NNSA is essentially communicating that the lowest evaluated cost/price is NNSA’s principal and (NNSA) is not concerned with hiring the best possible contractor to do the job. Therefore this runs high risk of decreasing standards in performance and goals for the next operator. With this change, we can anticipate that most experienced and qualified bidders will likely elect not to bid on this contract given current caps on fees set forth in the Draft RFP, the letter to NNSA states.

The Board is concerned about speculation that the Department of Energy is seeking out a non-profit modeled manager and operator for Lab contracts in an attempt to avoid paying gross receipts tax, which support public services around the region such as schools, transportation, infrastructure and public safety.

During Friday’s meeting, Jack Jekowski, who has worked for more than 50 years in the nuclear weapons business and most recently has focused on long-range scenario planning with the DOE, NNSA and the national laboratories, congratulated the Board and the Coalition’s membership community for the comments they have submitted to NNSA on the Draft RFP.

Jekowski said typically what happens after comments are submitted is nothing is heard from NNSA while they have their legal and contracting teams look at the issues.

“I recommend that you stay vigilant. Don’t expect a whole lot of feedback from those folks,” he said.

Jekowski said an important player in all of this could be Governor Susana Martinez. He said based on letters NNSA received from the Coalition communities, he was concerned that some of the issues raised could bubble up to Secretary of Energy Rick Perry’s office and that he might call down to Martinez.

“It would be a travesty if the Governor’s Office was not fully briefed. My biggest recommendation is to stay in touch with the Congressional Delegation and make sure the Governor’s Office is fully briefed and that she is engaged and on your side,” Jekowski said.

Jekowski said a big concern is that the NNSA has set the fee base for the contract so low.

“It’s something that’s been happening in DOE as both Congress and others have looked at the for profit model offered in the late 2000s and in that model the idea was that if you provided a rather robust fee of 3 and a half percent, you would attract more talented competitors and companies that wanted to do a good job and bring with them the systems and experience needed,” he said.

He said that model has not been very successful, at least not as successful as it was hoped to be. He said even back in the 2012-2014 time frame, major corporate entities would tell DOE, “look, 3 and a half percent just does not cut it”, that they are all publicly-traded companies and that the work that do outside of the DOE earns 5 percent to 7 percent. He said LANS had originally started out with 10 percent, which gave them $65 to $70 million but that had dropped down to $35 million.

“That money is how corporations justify doing this risky work to their shareholders and their boards. For the Los Alamos contract you are looking at $10 to $15 million each. How much of that fee can they reasonably give back. Ten percent might be a good number to use as it’s what was what was historically given in the 1990s,” he said.

Jekowski added that it was remarkable to him that even though LANS’s fee was so dramatically cut as a result of the WIPP incident, LANS said they had a commitment to their level of donation.

Jekowski expressed concern that a lot of federal employees that have decades of experience are gone.

“We’ve seen them disappear in the last five years. We’ve seen more than half of the very experienced common-sense type contractors leave. Their replacements are book competent but lack the historical knowledge of how all this connects with all the work that is actually being done at the Labs,” he said.

Jekowski said he has seen concern by a lot of folks that have vested time in the National Laboratories and are wondering what is going to happen to their benefits. He said the way he reads the Draft RFP is that they are marching more towards private industry standards to a different rule of thumb is now being used.

Jekowski said he didn’t know if the 1 percent fee would impact the small business initiatives that have been seen with LANS. He said in the 2005 RFP, there was a seven to 10 page attachment with a request for bidders to demonstrate how they would work with Northern New Mexico and the small businesses but that he didn’t see any of that in the current version of the Draft RFP.  He said the Small Business Administration has taken a very active stance in the last four or five years and have been watching the situation very closely.

“Los Alamos is different. It is a very unique animal to the DOE and needs to be treated differently. One of the concerns I have is that DOE budgets are being squeezed in all different directions trying to get the biggest bang for the buck. They are looking nationally for vendors that can provide lower costs for services,” Jekowski said. “What’s missing in the equation is the personal service by local vendors on your doorstep who can be called out if there is an issue or come to a meeting tomorrow afternoon if there is a problem.”

“That has to be balanced somehow with the needs of Northern New Mexico and the fact that the Northern New Mexico community has to be supportive and vibrant around the Lab.” he said.

“One of my greatest fears in thinking about this and reading back through all the letters, is what we call the ‘nightmare scenario’. What if the fee is 1 percent, and the contract is with a non-profit, and gross revenue taxes are reduced? Northern New Mexico loses $30 to $40 million per year and they don’t see the interactions occurring with the education system. Then what happens is you begin to build disenfranchisement between the communities and the Department of Energy,” Jekowski said. “You don’t want to go down that road because that’s a spiral down that has immediate consequences but also long-term consequences. If the community is not supporting the Lab and they see that in Washington, they may well say, ‘we can go to Oak Ridge or Savannah River. They like us over there.’”

 

 

Regional Coalition of LANL Communities Board members meeting Friday in Santa Fe, from left, Taos County Commissioner Mark Gallegos, Taos County Councilor Darien Fernandez, Rio Arriba County Commissioner Barney Trujillo, Santa Fe Mayor Javier Gonzales, Los Alamos County Councilor Chris Chandler, Ohkay Owingeh Representative Ron Lovato, RCLC Executive Director Andrea Romero and Communications and Administrative Manager Scarlet Rendleman. Photo by Maire O'Neill/ladailypost.com

Los Alamos County Deputy Manager Steven Lynne gives a budget update to the RCLC Board during Friday's meeting. Photo by Maire O'Neill/ladailypost.com

Santa Fe County Commissioner Anna Hansen welcomes the Regional Coalition of LANL Communities Friday. Photo by Maire O'Neill/ladailypost.com

Los Alamos County Councilor Chris Chandler chats with Jack Jekowski following Friday's meeting. Photo by Maire O'Neill/ladailypost.com


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