The Department of Energy awarded Bechtel National Inc. just 48 percent of the performance evaluation award fee available for calendar year 2017 for its work on the Waste Treatment Plant at the Hanford Site in Washington state, saying it had concerns about the company’s ability to meet contract milestones.
Bechtel earned about $3.81 million of the available $7.87 million, according to an award fee determination scorecard released Thursday by the DOE Office of River Protection at Hanford. The company was rated “satisfactory” for both incentive fee categories — project management and cost.
“DOE … had concern with the performance trends as reported in calendar year 2017, which indicates completion of the commissioning milestones are at risk,” the scorecard said, discussing the department’s 40 percent rating for project performance in the area of cost, schedule, and efficiencies.
The contractor, though, secured the full $17.1 million fee for the year by meeting four performance milestones ahead of schedule.
The Energy Department said Bechtel is using a significant amount of management reserve, referring to extra money intended to cover project risks and uncertainties. “Management reserve is being managed by questionable processes,” leading DOE to doubt Bechtel’s ability to meet its schedule to commission parts of the plant that will treat low-activity radioactive waste, it said. The scorecard did not provide further information on the management reserve.
The $17 million Waste Treatment Plant Bechtel is building will convert up to 56 million gallons of radioactive waste at the former plutonium production complex into a glass form for safe disposal. Treatment of low-activity waste must under court order begin by 2023, with full plant operations required by 2036.
The DOE scorecard concerns about the management reserve follow issues raised in a March 23 agency letter to Bechtel that was obtained by the watchdog group Hanford Challenge. In that letter, the department said Bechtel “is not making satisfactory progress in meeting the project performance expectations of Demonstration of Hot Commissioning by the Jan. 15, 2022, contract milestone date.” Given that situation, DOE said it would for 2018 withhold its provisional fee: an incremental payment for a contractor making progress toward the accomplishment of a specific contract milestone.
The Energy Department said in a statement Thursday that provisional fee payment would be withheld until Bechtel demonstrates “consistent and protracted” satisfactory performance, including in making progress toward hot commissioning, or demonstrating plant operations using waste, by Jan. 15, 2022.
The federal agency’s legal deadline for the start of treatment of low-activity radioactive waste at the plant is nearly two years later than the deadline it gave its contractor. The amended 2010 federal court-enforced consent decree for cleanup at Hanford requires treatment to start by December 2023. If DOE believes the deadline cannot be met, it must notify Washington state, a party to the consent decree; that has not yet happened.
The annual award fee determination scorecard for 2017 is the first since a major DOE revision of Bechtel’s WTP contract to reflect the plan to start treating low-activity radioactive waste while work continues on parts of the plant slowed by technical issues related to high-level radioactive waste. The revised contract puts more weight on achieving performance milestones for completing specific scopes of work and less on DOE’s subjective, annual evaluation of performance.
In 2016, when more money was available in the annual performance evaluation, Bechtel earned 71 percent of the available performance incentive pay of $10.2 million. It was the fourth consecutive year in which the contractor earned an increased performance score from DOE.
In 2017, Bechtel achieved early completion of four performance milestones, all for the Low-Activity Waste Facility. They were: one milestone each for installing two melters, a milestone for bulk cable electrical installation, and a milestone for installing a 19-ton caustic scrubber. Bechtel received its full fee for the four projects, a total of $17.1 million.
“Although we exceeded our customer’s goals by safely achieving four objective performance-based contract milestones ahead of schedule in 2017, we have additional work to do on the annual criteria graded by the Department,” said Bechtel spokesman George Rangel. “With continued on-time performance on our milestones and improvement in the annual criteria areas as the project moves through startup and commissioning, we’re confident in the plant’s ability to begin safely treating Hanford’s tank waste as soon as 2022.”
The Energy Department said it recognized the challenges associated with transitioning a project that has been focused on design and construction for 18 years to startup and commissioning.
In the scorecard, it criticized Bechtel’s turnover of some systems at the plant from construction to startup. “DOE observed that many of the turnovers were inefficient and were impacted by construction and design completion during this evaluation period,” the department said.
Bechtel’s nuclear safety program showed some improvement, but “ongoing attention and commitment is necessary to ensure current progress is maintained,” the scorecard said. At the Pretreatment Facility, final resolution of some technical issues has fallen behind schedule, according to the evaluation. The Energy Department has said they will be resolved in 2018.
