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Audit Report: OAS-M-08-02

November 26, 2007 

Contract Transition Activities at the Nevada Test Site

The Nevada Test Site (Test Site) is a unique combination of Federally-owned land and facilities located in a remote area approximately 65 miles northwest of Las Vegas, Nevada. The Test Site represents the United States' unique capability to support nuclear testing and complex dynamic experiments that involve nuclear and hazardous materials. Bechtel Nevada was the management and operating contractor of the Test Site from 1996 through June 30, 2006. In February 2005, the National Nuclear Security Administration (NNSA) competitively bid the contract to manage the Test Site and in March 2006 awarded the contract to the National Security Technologies, LLC (NSTec). NSTec is a limited liability company formed as a partnership between Northrop Grumman, AECOM, CH2M Hill, and Nuclear Fuel Services. The five-year contract is valued at approximately $500 million annually, with the potential for five additional years based on adequate performance. NNSA allowed three months for the transition between contractors to be completed. The objective of the audit was to determine whether contract transition activities were effective in protecting the government's interest and whether costs incurred were allowable, allocable, and reasonable.