COSTS CONTINUE TO GROW AT SPRU

By ExchangeMonitor

The cost for completing D&D efforts at the Separations Process Research Unit appears to be continuing to grow, although there is no sign in sight as to when a final price tag for the project will be set or decisions made on how costs will be allocated between the Department of Energy and project contractor URS. As of June 28, 2013, URS has incurred total projects costs at SPRU of $244.4 million, with recorded cumulative project losses of $16.3 million, according to the company’s second quarter 2013 earnings report, released earlier this week. URS’ newest estimate is approximately $10 million more than the last estimated total project cost for the SPRU D&D project. “Due to unanticipated requirements and permitting delays by federal and state agencies, as well as delays and related ground stabilization activities caused by Hurricane Irene, [URS] has been required to perform work outside the scope of the Task Order Modification. Based on changes and delays to date, requests for equitable adjustment (“REA”) amounting to $47.1 million and proposals related to the hurricane-caused impacts and other directed changes in the amount of $117.5 million have been submitted to the DOE for approval,” URS’ latest earning report says, adding that it “also expects to submit additional REAs of at least $17.0 million to the DOE.”

According to URS’ latest earnings report, over the course of this year it has “ submitted several certified claims against the DOE pursuant to the Contracts Disputes Acts seeking recovery of $112.5 million of the … unfunded REA and proposal costs incurred through April 2013 and $5.0 million of fee on the expanded work scope.” The report adds, “The final project completion costs are not currently estimable due to continuing delays in permitting, other delays, and approval of a final project plan.”

Questions over who is responsible for what costs at the SPRU D&D project have stretched back for years, after DOE moved in 2011 to modify URS’ contract to establish a cost cap in response to a set of contamination incidents that significantly set back progress at the SPRU D&D project. The modification established a cost-sharing formula in which DOE is responsible for all project costs up to $105 million; DOE and URS will split all costs incurred from $105-145 million; and URS will be fully responsible for covering all costs exceeding $145 million. However, URS has been pushing back against being held responsible for a significant portion of the costs to date incurred at SPRU, which have included, among other issues, addressing the impacts of bad weather at the site. DOE and URS have been in formal mediation talks to resolve the cost issues, but the timeline for any final resolution remains unclear.

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