This article is an excerpt from The Art of Tendering: A Global Due Diligence Guide.
In its April 2019 report entitled Modernizing the Nuclear Security Enterprise: NNSA Is Taking Action to Manage Increased Workload at Kansas City National Security Campus, the U.S. Government Accountability Office (GAO) noted that the “modernization of the nation’s nuclear stockpile depends on timely procurement and production of nonnuclear parts and components” since those parts and components make up “over 80 percent of the items in a nuclear weapon”. However, the GAO found that workload and staffing issues were causing delays in the procurement operations required to support those modernization efforts:
What GAO Found
Workload forecasts have significantly changed at the National Nuclear Security Administration’s (NNSA) primary site for procuring or producing nonnuclear parts and components of nuclear weapons since the site’s modern production facility was built in 2012. Specifically, workload projections made by the contractor operating the site, known as the Kansas City National Security Campus (Kansas City site), has increased significantly from forecasts used in planning the site’s new production facility. More recent forecasts show that to meet workload requirements, production and administrative staff will need to almost double by 2020 compared to 2014 levels. For example, workload to modernize the B61-12 and W88 weapons systems will double during fiscal years 2020 through 2022.
The GAO also noted that the new production facility was too small to house the expanded workforce required for the nuclear weapons program:
Kansas City site officials indicated that ensuring adequate production and administrative office space at the site is a management challenge because the current facility is too small to accommodate future workload. Specifically, forecasted workload demand has grown significantly since the modern facility was built in 2012. The new facility, which accommodates both production and administrative staff, replaced a deteriorating World War II-era facility that was much larger and had significant maintenance and operations costs, according to site contractor representatives. For example, according to NNSA documents, the move reduced the footprint of the site’s production activities from about 3 million square feet to 1 million square feet. According to site contractor representatives, the modern facility was designed to be more flexible in accommodating changes in the production line. For example, equipment can more easily be removed or installed at any location in the facility, to accommodate increased workload, because there is ready access to electrical, ventilation, or other necessary hookups and connections.
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The Kansas City site has identified that it needs an additional 250,000 square feet of production space in 2019 and ultimately a total of an additional 400,000 square feet to support the forecasted workload and associated staff increase. To mitigate the challenge of insufficient production and administrative space to support the forecasted increase in production staff, Kansas City site officials told us they are pursuing multiple short- and long-term strategies.
The GAO report also raised concerns over the challenges faced in managing the external supply chain due to the number of contractors that would be providing the large number of components for the new weapons:
Kansas City site contractor representatives identified challenges regarding the site’s monitoring and management of external suppliers’ capacity and skills, and other challenges—such as ensuring that suppliers are willing to establish long-term partnerships with the Kansas City site—that could affect supply chain risk. Since the site procures about 65 percent of its nonnuclear components from external suppliers, these management challenges are highly important, according to site contractor representatives. For example, disruption to the established supply chain due to insufficient capacity, skills, or a supplier’s decision not to do business with the Kansas City site can result in production delays. According to Kansas City site contractor representatives, delays in such instances are possible because site contractor representatives would need to take additional time to either replace the lost supplier or develop its own production line to produce the parts in-house at the Kansas City site.
As this report illustrates, public institutions should ensure that their long-term planning for complex procurement operations includes ensuring adequate staffing along with proper facilities to house the resources necessary to administer the institution’s procurement operation.
