Newest Estimate Could Increase Costs By Nearly a Billion Dollars
Kenneth Fletcher
WC Monitor
3/27/2015
The Department of Energy should improve its cost estimates for transuranic waste programs at Los Alamos National Laboratory, which are expected to surpass previous estimates by at least $900 million, according to a Government Accountability Office report released this week. The 2006 cost estimate for the entire LANL transuranic waste removal project stood at $729 million, but so far about $931 million has been spent on the project and a new cost estimate under development totals about $1.6 billion. Additionally, the new estimate “may not reflect current conditions,” according to the GAO report, “partly because of uncertainty created by funding and the indefinite suspension of shipments of TRU waste to the permanent repository at DOE’s Waste Isolation Pilot Plant (WIPP) after a radioactive release closed WIPP in February 2014.”
Legacy transuranic waste operations at Los Alamos have been on hold ever since a drum processed at Los Alamos was identified as the source of the WIPP release. Though the site has already processed the majority of waste, the remaining inventory is largely the more difficult and expensive to process transuranic waste being stored underground. While the National Nuclear Security Administration and the DOE Office of Environmental Management are developing a new cost estimate, “the new estimate may quickly become inaccurate because of changes in funding, and the status of the WIPP may soon invalidate its assumptions,” the report states. “According to best practices for cost estimating, maintaining an updated cost estimate is critical so that officials making decisions about the future management of a project have accurate information for assessing their alternatives. By revising the TRU waste removal project’s estimate to include the current understanding of project conditions, NNSA program managers could more accurately identify cost overruns.”
Report Also Cites Transuranic Waste Facility Cost Estimate
There are also issues with the cost estimates for the Transuranic Waste Facility project underway at Los Alamos, which aims to store, characterize and certify newly generated transuranic waste. The estimate only “partially reflected” the characteristics of a reliable estimate. For example, “NNSA did not sufficiently document the approach used to develop the operations and maintenance estimate, which represented about 74 percent of the TWF’s life-cycle costs, because DOE’s project management order does not require these costs to be documented when a project is approved to request funding from Congress for construction,” the report states. It adds: “By not sufficiently documenting the approach used to develop the estimate, NNSA may not have reliable information to support budgetary decisions for funding the TWF’s operations and maintenance in the future.”
The GAO said it recommends “that DOE revise the cost estimate for the TRU waste removal project to reflect the current understanding of project conditions and update the TWF’s cost estimate to allow better management of the project’s life-cycle costs going forward.”
NNSA Administrator Frank Klotz largely agreed with the recommendations in a Jan. 27 response to a draft version of the report. “NNSA is committed to building upon the progress made on our project cost estimates and will conduct life cycle cost estimates for all future projects in accordance with the NNSA Cost Estimating BOP. Accordingly, NNSA will update its cost estimates for both the TRU Waste Facility operations and maintenance, and Area G TRU Waste Removal Programs,” he said. He also noted progress already underway in regards to project cost estimates. “In the case of the TWF Facility, the construction cost estimate was within 1.25 percent of bids, and the project is on track and on budget,” he said.
