The contractor building the Mixed Oxide Fuel Fabrication Facility in South Carolina, locked in a dispute with the federal government over the project’s future, argued the Energy Department’s failure to negotiate a contract modification “in good faith” is costing the company money.
On June 1, the U.S. Civilian Board of Contract Appeals denied CB&I AREVA MOX Services’ appeal of a previously dismissed claim that the company should receive an additional $702,048 in award fees for fiscal 2013.
The Energy Department authorized construction on the MOX facility to begin in 2007, to meet the terms of an agreement requiring Russia and the United States to each dispose of 34 metric tons of excess weapon-usable plutonium. The contractor has said construction is over 70 percent physically completed and will cost $10 billion – including $5 billion already spent – with a completion date of 2029. Meanwhile, the U.S. Army Corps of Engineers has estimated the facility will cost $17.2 billion to complete by 2048.
The latest ruling said CB&I AREVA MOX Services believes it is entitled to the additional award fee because the contract language “mandates this result” and because DOE did not negotiate a modification under one of the contract options “in good faith.” Previous board filings showed a National Nuclear Security Administration (NNSA) contracting officer denied CB&I AREVA’s claims for a higher award fee, prompting the contractor’s appeal.
Still, the board ruled that “MOX Services has not cited any valid ground for reconsideration,” noting also that the contractor “does not identify any issues which are both contested and relevant to the resolution of the claim which was before us.”
The Trump administration’s fiscal 2018 budget proposal sustains the Obama administration’s efforts to terminate the MOX project, despite direction to the contrary from Congress – extending the battle between the Department of Energy, as it makes its case for an alternative plutonium elimination method, and the contractor, as it argues the technical and diplomatic merits of continuing with the MOX approach.
The White House’s budget includes $270 million for termination of the MOX facility and an additional $9 million to pursue the alternative disposition approach. The omnibus appropriations bill funding the government through the end of this fiscal year provides $335 million for MOX construction and up to $15 million for conceptual design activities for the alternative – illustrating Congress’ continued will to sustain the MOX program.
In February, the NNSA released its fiscal 2016 evaluation for the contractor, in which it gave CB&I AREVA MOX Services only 8.9 percent of its possible award fee for that budget year due to “unsatisfactory” performance. In a March letter to the NNSA, the contractor contended the agency is intentionally trying to terminate the project by obstructing the company’s work.
An industry source previously suggested that Obama administration carryovers within the NNSA’s senior leadership are largely responsible for the Trump administration’s proposal to terminate the MOX project – a claim NNSA Administrator Frank Klotz recently denied, saying the new administration has made its own assessments on the matter “with a fresh set of eyes.”
The alternative approach now being proposed would involve dilution of the plutonium at DOE’s Savannah River Site and eventual disposal at the Waste Isolation Pilot Plant in New Mexico.
