The U.S. Energy Department's decision to award a $4 billion Savannah River Site management contract to a new firm was justified, even though the existing operator's bid was $48 million less, according to a newly released evaluation by the U.S. Government Accountability Office.
Savannah River Nuclear Solutions was awarded the five-year contract in January over a competing proposal from Savannah River Alliance, composed of incumbents of Washington Savannah River Co., which has managed the site since 1989.
Savannah River Alliance appealed the award to its competitor on grounds that its rival's price was higher and that conflicts of interest existed within its management.
The GAO ruled April 25 that the Energy Department was justified in its decision -- and earlier this month released its 25-page ruling after removing names of specific personnel discussed during the appeal.
Auditors found the two proposals were "substantially equivalent" under all categories except management personnel, which accounted for 25 percent of the selection criteria.
In that section, the GAO wrote, "while the two offerors proposed chief executives and laboratory directors who had substantially equivalent experience, the rest of SRNS's key personnel had more extensive experience."
The SRNS team also performed well during oral presentations, the report said, while "SRA did not function as an integrated team and overall was less interactive than the SRNS team."
Of nine selection criteria in addition to contract price, the rivals received identical ratings in eight of them.
In the deciding category, SRNS received an "excellent" in "key personnel," while SRA received a rating of "good."
SRA's "evaluated price" was more than $424 million, while SRNS's evaluated price was just over $473 million, the report said.
The $48 million difference, which would be spread over 10 years with the assumption that the five-year contract would be renewed for a second five years, adds up to about $4.8 million a year more, the GAO wrote.
The higher cost was justified because of "advantages in leadership, innovation, efficiency and productivity improvements," the GAO concluded in denying SRA's appeal.
"Agency's selection of higher-priced, higher-rated proposal for award is reasonable, where the key discriminator between proposals was under the key personnel factor, which was one of the most heavily weighted factors in the evaluation," the GAO wrote.
Savannah River Nuclear Solutions, which will assume its management role Aug. 1, will be responsible for about 7,000 employees and has pledged to make an orderly transition.
Reach Rob Pavey at 868-1222, ext. 119 or email@example.com.
- Savannah River Nuclear Solutions, whose bid was ultimately chosen, is a new partnership that includes Fluor Federal Services, Newport News Shipbuilding and Drydock Co. (Northrop Grumman), Honeywell International, Lockheed Martin Services and Nuclear Fuel Services Inc.