Army's Decision Not To Contract for Penetrator Production at the Feed Materials Production Center, Fernald, Ohio, Was Justified

GAO reviewed the appropriateness of the Army's decision not to contract for production of depleted uranium core penetrators at the Department of Energy's (DOE) Feed Materials Production Center.

A cost comparison between the proposal submitted by Nuclear Metals, Inc. (NMI) and a cost estimate submitted by DOE for its Center shows that the NMI proposed costs were lower. DOE stated that its cost estimate was for a comparative analysis of industry bids and was not intended as a proposal for production; it reaffirmed its position of not competing with capable contractors interested in the work. It stated that it would consider filling the Army's needs for core production only where private contractors will not or cannot fulfill the production requirements. The $5 million necessary to facilitize the Center for the Army's needs exceeded the $3.3 million NMI required. In the opinion of GAO, there was no effect on the timely delivery of the XM774 round, a depleted uranium penetrator, because the Army went to commercial contractors rather than to the Center; the Army acted reasonably with this procurement. GAO does not know if the Army will again request DOE to prepare a cost estimate and to commit the Center to the mobilization base. Unless DOE reconsiders its policy regarding competition with private industry and becoming part of the industrial mobilization program, it would be fruitless for the Army to request DOE to submit any kind of proposal.