Vol. 20 No. 11 • Mar 11, 2016

Industry Officials Challenge NNSA RFP Changes

Alissa Tabirian
NS&D Monitor
3/11/2016

Industry officials are split in their perspectives on changes to the National Nuclear Security Administration’s (NNSA) approach to its procurement process, with some criticizing major shifts in the NNSA’s focus of contractor evaluations and others arguing the new model will be more efficient. Several industry sources not authorized to publicly discuss the matter spoke to NS&D Monitor on condition of anonymity.

The point of contention in the new approach, so far only used in the requests for proposals (RFP) for the National Security Campus near Kansas City, Mo., and the Nevada National Security Site, involves three evaluation criteria in issuing new contracts: past performance; site organization and qualifications of key personnel, which refers to the management structure at the site; and small business participation. Previous RFPs featured several additional criteria; key among those was a “science and technology” item – the bidder’s planned technical approach to running the lab– which was most heavily weighted in the previous evaluation approach.

Now, with past performance most heavily weighted, the NNSA evaluates the bidder’s work during the previous five years – the more relevant the past performance, the better. If the bidder does not have a record of relevant past performance, it is assigned a neutral rating. The NNSA also credits all companies equally for past performance in the case of contractor teaming arrangements.

Joe Waddell, the NNSA’s deputy associate administrator for acquisition and project management, said in written responses to NS&D Monitor questions that the new approach “places greater emphasis on factual information that is subject to independent verification and less emphasis on promises of performance.” The NNSA “may or may not continue using it in other future solicitations,” he said.

Several industry sources told NS&D Monitor that while the new RFP offers a simpler and less costly process, potentially with a shorter procurement timeline, a significant shift in emphasis from science and technology to past performance could have the greatest impact on industry players.

The Problem of Past Performance

Some industry sources said that the shift biases the selection to the incumbent contractor. One executive with a current NNSA contractor said that from most of the industry’s perspective, “it’s viewed as almost like an incumbent protection program, because it doesn’t allow for any innovation – and generally the one company that can meet all the criteria for the past performance is the company that’s currently performing the work.”

While past performance was previously downplayed to offer new companies with no NNSA experience an opportunity to enter the industry, some said, the new approach may limit the competition primarily to the existing group of NNSA contractors. Others offered a different take, as an official with another contractor said “the elevation of the importance on past performance is more of an issue for people that have marginal to poor performance than it is for people that might have somewhat slightly less relevant experience in past performance.” On the new model, the source said, “I’m OK with that. If I was buying, I would look very heavily at past performance.”

Waddell argued the past performance criterion “favors all bidders who have a successful track record of performance on similar work,” even without experience working for the NNSA. Outsiders looking to break into the industry “will be competitive if they have relevant experience and a good track record of performance,” the agency’s senior procurement executive said. He added that the White House Office of Management and Budget considers the past performance criterion a best practice in its federal procurement policy because it fosters an “active dialog between the contractor and the government” and ensures that contractors “know the assessments will be used in future award decisions.”

Uncertainty Over Lack of Technical Approach

Still, industry sources questioned the elimination of the science and technology criterion, noting that there is no equivalent to this standard in the new RFP. “It doesn’t ask you how you’re going to do something. They ask you how you’re going to organize to do something,” one source said. Another said the NNSA might be looking to “select what they view as the best team of people, and then they’ll work with them once they’re there to figure out what the program is.” The problem with this approach, the official said, is that “it doesn’t allow for any innovation or any ability to distinguish yourself from the next competitor in a real way. You can’t really show what you bring or how you might bring something to that particular project.”

One industry official noted that elimination of this criterion significantly streamlines the proposal evaluation process. Much of the NNSA’s evaluation effort has been concentrated in the bidder’s technical approach, so its exclusion has reduced the amount of work for both evaluators and proposers, the official said. Moreover, this move might actually help nonincumbent bidders, the source said, in that they would not necessarily need to demonstrate the depth of site knowledge – which an incumbent would presumably have – necessary to develop a technical approach.

However, the official considers the previous model that included the technical approach a successful one, suggesting the impact of its elimination on the execution of a contract remains unclear. “For multibilliondollar, fivetotenyear national security contracts that we’re talking about here, I do wonder if the lack of a technical approach truly is in the best interest of the government,” the official said.

Equal Credit for Different Roles

When the NNSA released a draft RFP for management and operation of the Nevada National Security Site last September, it sought feedback on its contract evaluation criteria by providing two options to assess past contractor performance. The first option suggested the government credit parent companies equally on positive or negative assessments, while the second would give the bidding entity the option to arrange a scope agreement among parent companies that would outline the responsibilities of each one to guide the NNSA’s assessment. The latter was dropped from the final RFP issued last November.

A possible reason, according to one official, was that “too many of the competitors for Nevada did not see it as an advantage.” The source said this is still an open issue worth considering, but that as long as limited liability companies (LLC) are integrated rather than scopebased, the current method “is the right way for the [Department of Energy] to do it.” Otherwise, the official said, “it would be extraordinarily difficult for the DOE to apportion scoring and to give different members of a performing LLC different past performing grades.”

Waddell confirmed that for the final Nevada RFP, “the procurement team determined that distinguishing performance between current LLC members was not practical given interlocking management structures at most sites which emphasize working together as a single unit rather than as a collection of autonomous entities.”

Another industry official expressed skepticism over the NNSA’s calculation of past performance for teams. In addition to the challenge of assigning credit to LLC members, the government must arrive at an overall score using multiple past performance references from several different team members. “How do you average the past performance of multiple contractors and develop one score?” the source asked.

Waddell did not offer specific details on the NNSA’s calculations, but said that “as a rule, the team is evaluated as a whole considering both positive and negative performance information” and that the NNSA considers “the relevance of the prior experience when assessing a performance score to the team as a whole and for each member of the team.”

Ongoing Challenges: Proposal Cost and Award Schedule

Industry sources acknowledged that the new RFP may improve the bid and award timeline that has often been criticized for being overly lengthy. One source noted that procurements sometimes extend through three different fiscal years. This adds cost and uncertainty for the contractors that need to forecast their work, revenue, and personnel placement, a source said. Under the new model, however, “there should be no reason to take nine months to evaluate these proposals – there’s not much to them,” the source said.

Another official agreed, calling the “very distracting” timeline uncertainties the biggest problem with the existing RFP process. The official called for a project plan that would assist contractors by reliably outlining the process, namely by detailing the ordering and time frame of procurements. This view is reminiscent of concerns raised in a 2014 bid protest by a Babcock & Wilcoxled team for the Y12 National Security Complex and Pantex Plant management and operation contract, which argued that budget conditions at the sites had changed enough during the course of the NNSA evaluation process that the bidders’ original proposals were no longer relevant.

According to Waddell, the NNSA “has received positive feedback that its current approach has significantly decreased the cost of competing” and expects to “complete competitions in less than one year, a significant improvement over past practice.”

Subjectivity and Objectivity in Bid Evaluations

Some industry sources believe that a simplification of criteria provides the NNSA more room for subjectivity in its evaluation of contract bids. One source said fewer, more broadly defined criteria indicate “the government almost has the ability to orchestrate their evaluations any way they way.” The new approach might therefore “increase the potential for [bid] protests, but [the NNSA] may win more of them,” the source said. The Government Accountability Office will make perhaps the best determination of the legitimacy and logic of the NNSA’s new RFP approach in the event of a bid protest, another source said.

However, one official argued that the elevation of past performance will make the NNSA’s evaluation more objective, not only because it will rely on outside documents – the contract performance evaluation reports – but also because it will no longer consider a technical approach, which used to be an area of significant subjectivity. The source also said that the Department of Energy “has become a more disciplined grader in the scoring of performance.”

Industry Feedback

One official said industry is able to provide feedback on procurements to the NNSA through a “decently robust process” beginning with the NNSA’s request for information, the industry day, the draft RFP, and even the debrief after the contract is awarded. Even so, sources expressed some confusion over a statement made recently by Waddell that he believes industry favors the new approach.

In his responses to NS&D Monitor, Waddell said that in addition to the feedback obtained throughout the process, NNSA surveyed the M&O contractor leadership “regarding a number of issues raised in the many governance studies that have been done over the past year or so.” However, several officials said they had not directly been asked for feedback in any oneonone
or informal discussions.

These officials were split in their overall assessments of the new approach. A few said they believe the Nevada contract received bids from five teams, a number that one said demonstrates “the streamlined format has increased the competition.” Indeed, Waddell noted that “NNSA measures success of its procurement approach by the quality of the competition and we’ve been receiving substantial competition.”

“I can’t think of an NNSA proposal frankly where they have gotten more than three bids,” the industry official said. “They wouldn’t have gotten a record number of bids for a large NNSA contract if nobody liked the format or didn’t think they could compete in the format.” Other sources indicated that time would tell whether the new approach leads to better contractor selections and performance, but that even with the changes in the RFP process, “I’m not sure anyone believes that the government’s getting a better product.”