Staff Reports
NS&D Monitor
4/25/2014
With the transition of contractors at Y-12 and Pantex about a third of the way through, Bechtel-led Consolidated Nuclear Security President and CEO Jim Haynes has opened up more about plans and impacts and discussed some of the difficulties in what he’s termed the “mother of all transitions.” Haynes noted previous transition of contractors at Department of Energy sites involved a single plant, a single set of employees, with a single set of benefits and a single culture that has to be developed. “This is so different in that it’s two sites now and potentially three if the Savannah River tritium operations are added, multiple systems, benefit plans, very different IT infrastructure, different procedures. … Think of what you’re inheriting on the first of July with the number of buildings and types of operations that are done at the two sites,” Haynes said. “Let’s just say that it’s a very different transition from what’s been done in the past, and it’s been compressed from six months to four months, which makes the job even harder.”
CNS Won’t Do Full HEU Inventory
One of the ongoing activities associated with the changing of contractors at Y-12 and Pantex is that CNS is taking an inventory of everything before it assumes full responsibility for the sites. Haynes confirmed, however, that the CNS team is not doing a full inventory on the highly enriched uranium at Y-12, even though it’s probably the most important asset that the team will inherit. He explained the reasoning for doing only a partial inventory of the HEU. “There was an inventory done very recently, so what we are doing is we’re working through with the incumbent [B&W Y-12] that inventory process, checking how they did it to make sure we’re comfortable with that and then doing some spot checks,” he said.
B&W Y-12 has been doing inventories of the HEU on a quarterly basis, he said. The limited inventorying of the uranium is still underway but Haynes said he feels confident that the reviews and checks done by CNS will match up the inventories of special nuclear material done by B&W Y-12. “I think the inventory today has shown that things are matching up, and we expect it to be that way. We’d be pretty disturbed if it wasn’t,” he said.
Haynes Explains Benefits Changes
While job reductions have not as high as some expected at the site (see related story), the changes in benefit packages have not yet been fully revealed. But Haynes acknowledged there would be changes—in part because both Y-12 and Pantex have been out of compliance with a DOE order that government how much in benefits can be offered. According to responses from Haynes and the National Nuclear Security Administration, the plans at both plants significantly exceed the average benefit value for contractors and comparable companies that are analyzed to establish this baseline. “The requirement [associated with DOE Order 350.1] is that you can’t exceed 105 percent of the BenVal average,” Haynes said. He said the benefit plan CNS is submitting to NNSA will be an effort to “normalize” the benefit packages at Y-12 and Pantex. “Our goal is to get it down to 105 percent so we’re compliant,” he said.
Asked why the plants were in violation of the DOE order, NNSA spokesman Steven Wyatt said the plants have not been able to keep up with changes in the marketplace. “The benefit value (BenVal) study provides a benchmark at a particular point in time, but the target is always moving. Both Pantex and Y-12 were within the 105 threshold prior to 2008, and since then have not kept pace because of rapidly changing benefits in industry. Both sites took steps to reduce their benefit value index such as closing the Defined Benefit plan to new hires. Corrective actions that would better align Pantex and Y-12 with industry were delayed because the contract was being competed and subsequent delays impacted Pantex’s and Y-12’s ability to make benefit adjustments.”
UPF: Waiting on Red Team
Another huge part of the transition will be the CNS role on the Uranium Processing Facility. Because that situation is still in flux, Haynes said the focus is trying to keep the project moving while being cautious about wasting any money unnecessarily. “I think UPF right now is in such a period of change that we’re sort of waiting to see the results of the Red Team evaluation,” he said, referring to the UPF alternative study headed up by Oak Ridge National Laboratory Director Thom Mason. He said he was part of a briefing on the Red Team results a couple of weeks ago at ORNL before the final report was prepared. “Thom Mason said there’s a clear consensus,” he said. “There was a pretty clear feeling on their part that UPF can be built for $6.5 [billion]. And with the capabilities of 9212 put in by 2025. But, in order to do that, they needed to make some changes in the structure of the building and continue some of the momentum of the design so that you can get there.”
Asked if he was referring to the structure of the main building, he said, “Well, the essence of the report was that … it’s really a combination of a new build together with some infrastructure builds within the current buildings [9212 and Beta-2E] as well as some expense-related, sort of the normal stuff you do, like the Facilities Risk Reduction program and that sort of thing that’s already ongoing.”
UPF Construction Contract Still Undecided
Haynes said the move ahead would require a combination of investments. Haynes said the UPF team has now been restructured to focus on the “high-equity” part of the design effort, work that everyone is confident will be part of the future. At the same time, they’re awaiting details of the Red Team report before they “open the aperture” again on the big project’s design, he said. As to how the UPF construction contract will be handled, Haynes said, “That’s still to be worked with the customer. I think what you will find, as with most large construction projects where you have a critical path that really determines whether you’re going to make it or not, is it will be a combination of subcontracted construction managed by a central construction management organization within CNS.”
He indicated there would likely be a combination of different subcontract packages, noting one of the current arrangements on site prep where Avisco is working under the management of the Army Corps of Engineers with the support of the M&O contractor (currently B&W Y-12). “And it seems to be working well,” he said. That management model could be used for a portion of the new build, he said, but other packages could be handled differently, citing work with heavy mechanical and electrical work that could really cause the project to slip if it gets off the critical path. “The actual contract mechanism is not fixed yet. UPF is behind what’s called CLIN1 … in terms of the negotiations of the contract. … It’s probably going to continue to lag because we want to get the Red Team assessment completed and locked in so that we can then negotiate based on fixed scope. If you don’t have fixed scope, you can’t do anything,” he said.
Haynes Defends UPF Work
Haynes strongly defended the work of the UPF design team and suggested that the big issue that forced a major redesign effort—because of insufficient space—was not the fault of the designers. He said there’s a lot of pressure on the UPF team. “Everybody connected to UPF feels a lot of pressure. There’s been a lot of change on UPF. It’s a fantastic team. They’ve been working incredibly hard,” Haynes said. “I think the shame of the whole thing is there are hundreds of people from the best design firms in the country. You’ve got Merrick, you’ve got [CH2M Hill], you’ve got URS, you’ve Jacobs, you’ve got Bechtel, you’ve got B&W—all putting some of the best and the brightest on this thing and managing to do a fantastic job of designing to the scope that was developed.” He added: “The problem was that some of the early decisions locked them into a footprint. It was never too small to fit, but it was too small to give the confidence that the operators and the maintainers would have enough space to do what they need to do.”
It’s unfair to call the thing a “design screwup,” he said. “What happened was there was a decision made to lock down the footprint too early. Because if you locked the footprint down—this was like in 2008—you could start construction within a period of about 12 months to 18 months. If you were to start construction then, you would have been able to pull the schedule back and then lower the cost significantly. The problem was that locking down of the footprint was done at a very early design. So the decision was made for the right reason ’cause you could have a big win on the other end. But they accepted the risk that it might not work.” Whatever the case, “It is what it is,” Haynes said. “But, to circle back, everyone feels a great deal of pressure to get it right, to minimize the cost of any redesign and make sure we hit that 2025 date with the budget. We’ve got one shot to get it right.”
