More details have emerged on the agreement in principle struck between the Department of Energy and Salt Waste Processing Facility contractor Parsons on the path forward for completing construction of the plant. Both DOE and Parsons have thus far declined to provide details about the deal, but WC Monitor has determined that the two sides have agreed on a new contract value of about $1.7 billion that includes the need for $500 million in additional funding to complete construction on the project. The $500 million figure is a hard cost cap for construction—DOE and Parsons will split any cost overrun up to $20 million beyond that cap and Parsons will be fully responsible for any cost overrun above that.
Parsons could earn a construction bonus of $10 million if it completes construction by November 2016, with the added incentive of an additional $2 million for each month earlier than November 2016 that construction is completed. Conversely, Parsons would be penalized $2 million for each month past December 2016 that construction is completed. Commissioning and operations remain part of Parsons’ contract, but the cost and fee for that work hasn’t been negotiated yet. The agreement envisions, though, that all commissioning and startup operations will be complete by Dec. 31, 2018.
Notably, Parsons submitted a revised Estimate at Completion for the project last spring that proposed a $437 million increase in the cost of the project, including the cost of startup and commissioning. The $500 cost cap that DOE and Parsons have agreed to over the last few weeks is only for construction, meaning that hundreds of millions of dollars remain necessary beyond the current figures to actually get the plant up and running under the new agreement. Parsons declined to comment and DOE did not return calls for comment Friday.
