NNSA’s Office of Acquisition and Project Management was established in 2012 to focus construction project delivery and acquisition improvements. Modeled after the Department of Defense and industry practices, The office provides the NNSA Administrator, Program and Field Offices independent counsel to ensure NNSA implements federal acquisition and project management policies and regulations.
A separate acquisition and project management office:
- provides independent dedicated acquisition, project management, and oversight that aligns contract incentives with taxpayer interests;
- provides clear lines of authority and accountability for federal and contractor personnel;
- manages assigned projects within the original scope and cost baselines, ensuring completed projects meet mission requirements;
- improves cost and schedule performance; and
- strengthens cost estimating and alternative assessments and evaluation.
A unique aspect of the Department is its use of Management and Operating (M&O) contracts, which are central to the Department of Energy’s (DOE) business model.
The Department’s M&O contract arrangement, which represents 90% of the agency’s mission, was put in place during the Manhattan Project era to take advantage of the technical talent of the nation’s universities and private companies in support of national security and other national priorities. M&Os become accountable and responsible for both managing their sites and facilities while accomplishing the mission. This arrangement allows for a streamlined federal workforce to oversee the work.
The NNSA federal business approach applied today puts the burden and risk on the M&O. When the M&O contractor performs well, it receives a performance fee. With poor performance, the fee is reduced, eliminated entirely or the contract is rebid. NNSA understands the value of long-term contracts to avoid mission disruption and uncertainty of contract transition; however, NNSA’s business model is aligned with private sector and government best practices. NNSA will take appropriate action to ensure we maintain the highest performing contractors to manage NNSA facilities and operations to ensure safety, security, and quality. This competition-based approach helps achieve outstanding performance.
NNSA is driving continued improvement in contract and project management practices. This includes policies and procedures that institute rigorous analyses of alternatives (AoAs); provide clear lines of authority and accountability for federal and contractor program and project management; and improve cost and schedule performance.
Since 2012, NNSA has delivered its $1.4B project portfolio 8% under original budget. As a result, NNSA was removed from GAO’s High Risk List for projects less than $750M in 2013.
NNSA fosters competition even beyond the M&Os through best value acquisition solutions. Essentially, NNSA’s diversified approach allows qualified contractors, other than the traditional M&Os, to compete in fixed price, non-nuclear contracts. Contractors have included the U.S. Army Corps of Engineers, the Tennessee Valley Authority, and others to meet mission requirements when a better value to government was demonstrated. The competition creates motivation among the parties to strive for exceptional performance, operate within budget and execute on time.
Additional oversight of M&O contractors involves aligning contract structures and incentives with taxpayer interests to encourage further contractor performance. For example, the contract for the Transuranic (TRU) Waste Facility at Los Alamos National Laboratory was structured so that that the contractor could earn more fee if it delivered under budget. Conversely, the contractor could lose all fee and pay for the overrun if the project delivered over budget. This contract model proved successful, and the TRU Waste Facility was the first nuclear facility NNSA delivered under budget. We are using this model at other locations.
A final point on effectively managing and overseeing M&O operations is that NNSA developed a systematic process to conduct independent third-party project peer reviews to ensure that all projects are tracking on budget and schedule. As part of this process, NNSA issued a 90% design policy requiring nuclear projects to achieve final design completion prior to starting construction. NNSA also has issued Program Management Business Operating Procedure clarifying roles, responsibility, authorities, and accountability for the Programs, Field, and Functional offices across NNSA to ensure everyone is aligned for delivering safe quality construction, again on budget and schedule. Several of these policies and processes were later exported to the Department and codified in DOE Order 413, Program and Project Management for the Acquisition of Capital Assets.
Learn more about NNSA’s M&O PEMPs, PERs, and contract modifications. The sites managed by NNSA:
Engaging small businesses is extraordinarily important to NNSA. Not only do we receive high quality work from our small business partners, but also we reinforce our national security by creating strong local economies and by giving local business owners and employees an opportunity to be a part of our enduring national security mission.