Fluor Disappointed Over National Nuclear Security Administration Contract Cancellation

Fluor Corp. (FLR) issued a statement regarding recent decision by the National Nuclear Security Administration on pantex plant and y-12 national security complex contract award. The company is disappointed in the decision to cancel the previous award, but the company continues to see significant opportunities for new awards and growth across its market segments in 2022.

Fluor reaffirmed its 2022 adjusted earnings-per-share guidance.

On Monday, the Department of Energy's National Nuclear Security Administration or NNSA announced that it cancelled its November 2020 contract solicitation for management and operation of the Pantex Plant and Y-12 National Security Complex and terminating the contract award announced in November 2021 for the two sites. NNSA intends to hold two new competitions for separate contracts to manage each site.

In December 2021, the Government Accountability Office received protests of NNSA's contract award. In January 2022, NNSA was taking voluntary corrective action to assess alleged organizational conflicts of interest and alleged proprieties.

Based on NNSA's review of the procurement record and assessment of increased requirements at the sites, cancellation of the solicitation and termination of the resulting award is appropriate to safeguard the integrity of the procurement process and to best address NNSA's mission requirements, NNSA said in a statement.

NNSA determined that it requires separate contracts to manage Y-12 and Pantex.

In November 2021, NNSA awarded a management and operations contract for Pantex and Y-12 to NPOne, a limited liability corporation led by Fluor Federal Services Inc. and AECOM Federal Construction. That contract was for up to 10 years and a value of up to $28 billion.

Under the actions announced Monday, NNSA will terminate the November 2021, contract award to NPOne.

Both facilities are essential to maintaining the nation's nuclear stockpile. Missions at Pantex include assembly and disassembly of nuclear warheads, testing and evaluation of special weapons materials, and manufacturing and assessment of high explosive used in weapons.

Y-12 is responsible for production, surveillance, dismantlement, and storage of nuclear components; reducing global nuclear threats by detecting, removing and securing nuclear material; and providing fuel feedstock for Naval Reactors.

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