By Shelia Watson
Contributing Writer

The cost estimates for a proposed Mixed-Oxide Fuel Fabrication facility at the Savannah River Site, a 310-square-mile site about 15 miles southeast of Aiken, have increased more than 300% since the Department of Energy reported a design-build cost of $1 billion to Congress in 2002.

A recent audit by the Department of Energy’s Office of Inspector General found that the proposed MOX plant, which would turn weapons-grade plutonium into fuel for nuclear power reactors, will cost $3.5 billion.

Audit findings

The audit showed that by July 2005, nearly half of the $1 billion originally estimated for design and construction had been spent on design alone. The National Nuclear Security Administration, which gave the original estimate to Congress, attributed part of the cost overruns to a change in work scope, including design work intended to reduce construction costs overall.

Among the specific costs incurred by the NNSA were $144 million for process equipment and software designs, with the agency estimating it would spend a total of $324 million for the design activities.

“Although schedule delays … and added scope have resulted in cost impacts,” the audit stated, “we determined that NNSA’s project management weaknesses and limited oversight significantly contributed to the project’s cost increases.”

The audit noted that key project management practices necessary to control costs and quickly identify and report performance concerns were not employed by the NNSA.

“NNSA’s project management practices did not mitigate the risk of cost growth associated with the cost-plus-fixed fee contract used for the MOX facility project. Specifically, NNSA did not incentivize the contractor to control costs, nor did it establish an effective performance baseline. Further, NNSA did not ensure that monthly reports and cost ceilings were meaningful and relevant.”

Management response

NNSA management agreed with the audit’s recommendations for improving project oversight and initiated corrective actions, such as identifying deficiencies in contract management and directing the contractor to develop a corrective action plan.

The NNSA is also reorganizing the program to streamline reporting and strengthen project management.

However, the NNSA disputed the statements regarding cost estimates, saying such estimates may be misleading unless placed in proper context.

In its written response, the NNSA stated that comparing the current cost estimate, which reflects future year dollars, to that which appeared in the 2002 report to Congress, which was expressed in 2001 dollars, overstates the cost difference.

Timing is everything

The audit findings come two months after a groundbreaking ceremony commemorating the beginning of site preparation activities for the construction of the MOX facility and one month after significant funding for the Savannah River Site through the fiscal year 2006 Energy & Water Appropriations Bill.

Upon release of the bill, South Carolina’s U.S. Sens. Lindsey Graham and Jim DeMint along with U.S. Rep. Gresham Barrett, R-S.C., characterized the 2006 funding as adequate to carry out the important operations of the site.

“We didn’t get everything we had wanted, but in a time when everyone has been asked to cut back on spending, I don’t think we can complain about the overall funding levels,” said Barrett. “As we move into 2006, I will continue to work with the other members of the delegation to secure the necessary funding to move forward on current projects and promote new missions.”

Although a construction permit was issued by the U.S. Nuclear Regulatory Commission early last year, the request to the NRC for an operating license for the MOX facility was delayed from end of fiscal year 2005 to third quarter 2006 in order to allow for changes to the design before sending in the application.

The MOX facility is part of a nuclear disarmament agreement with Russia. Last April, a shipment of MOX fuel arrived at the Port of Charleston, returning from France where it had been shipped by the DOE for conversion into MOX because there currently are no plants in the United States capable of converting the material.

The shipment was sent first to the Savannah River Site and later to the Catawba Nuclear Station in York, S.C., for testing. The testing at Catawba was part of the U.S.-Russian agreement to convert 34 metric tons of surplus plutonium.

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