Mike Nartker
WC Monitor
5/23/2014
More details emerged this week over URS’ ultimately unsuccessful attempt last summer to be terminated from the Separations Process Research Unit (SPRU) D&D project. At issue was a contract modification (M035) reached with the Department of Energy in the wake of a set of contamination incidents that disrupted work at the site that made URS largely responsible for additional costs incurred and set a completion date of the end of 2011; work still progresses at the site to this day and questions persist over the final completion schedule. URS charged, however, that it would not have agreed to the modification if it had known at the time what additional work would be needed at the SPRU site, according to an Aug. 15, 2013, letter WC Monitor obtained through a Freedom of Information Act request. “URS’ agreement to the completion objective was premised on the belief that the work could actually be completed by December 31, 2011. We both now know that that assumption was not correct,” Lisa Maul, URS’ business services manager at the SPRU D&D project, wrote in the letter to DOE.
With the contract modification having been reached in early 2011, it is unclear why URS chose more than two years later to express concerns and seek termination. It also remains unclear how many times to date URS has asked to be terminated from the SPRU D&D project. URS declined to comment this week.
SPRU D&D Costs Continue to Grow
The SPRU D&D project entails the removal of two buildings at the Knolls Atomic Power Laboratory used in the 1950s to research chemical processes for separating plutonium and uranium from irradiated materials. In the fall of 2010, a set of contamination incidents occurred during open-air demolition activities at one of the two SPRU buildings that resulted in the spread of low levels of contamination to the broader laboratory site, as well as to a local river. A subsequent DOE investigation into the incidents attributed their cause to URS’s failure to understand and control the radiological hazard present and poor work control processes.
The contract modification reached in 2011 set up a cost-sharing approach for completing work. That approach entails DOE being responsible for all project costs up to $105 million; DOE and URS splitting all costs incurred from $105 million to $145 million; and URS being fully responsible for covering all costs exceeding $145 million. Since then, the total project cost at SPRU continues to rise due to a number of factors, and it remains unclear when a final estimate will be completed, though DOE has said it expects to finalize a cost-and-schedule baseline by the end of this fiscal year. As of April 4, URS had incurred a total project cost of $271 million at SPRU, according to a filing with the Securities and Exchange Commission, and the company has warned the cost could exceed $300 million.
URS Suggests It Was Misled
In its termination request, URS said it would not have agreed to the modification if it knew at the time the Environmental Protection Agency permitting requirements that would need to be completed as part of the effort to restart D&D activities after the contamination incidents occurred. In response to the contamination incidents, DOE made changes to how work at SPRU would proceed, including by seeking EPA approval for a set of tent enclosures equipped with ventilation systems that were constructed around the two SPRU buildings to prevent future releases. According to URS, nothing in the contract modification required that National Emission Standards for Hazardous Air Pollutants (NESHAP) pre-construction permits would be required to perform the work. “Whether EPA issues the permits and how long EPA takes to issue the permits is not within the control of URS. However, URS does know, as does DOE, that when permits are required, EPA may take a year or longer to issue the permits,” Maul wrote.
Maul went on to write, “Knowing that, URS would not have agreed to set an objective to complete the physical work in 11 months (by December 31, 2011) if there was a possibility that EPA permits would be required, and that those permits might not permit URS to even start the physical work for one year (by February 1, 2012 or later). And presumably, DOE would not require URS to undertake something that was impossible.” She added, “If both URS and DOE mistakenly believed that the project could be accomplished in 11 months, Modification M035 should be reformed or terminated because had the project known the true facts they never would have entered into Modification M035 as written.”
URS went so far as to suggest that DOE had been intentionally misleading over what permitting requirements would be necessary. Maul wrote that “the facts suggests that DOE did know that EPA would require NESHAP pre-construction permits, and that DOE did not that fact to URS in Modification M035 or the negotiations that led up to Modification M035.” She added, “If that is correct, DOE somehow withheld or failed to disclose superior knowledge to URS. … In such a case, a court would say that Modification M035 was void. DOE would not be permitted to benefit from its apparent misleading of URS.”
DOE Said Both Sides Knew Risks
In a subsequent reply, however, DOE shot down the idea that it had sought to mislead URS before reaching the contract modification. “Both DOE and URS were in communications with U.S. Environmental Protection Agency (EPA), Region II, throughout their investigation and both parties were on notice that the EPA considered the SPRU site NESHAPs [National Emission Standards for Hazardous Air Pollutants] non-compliant prior to the execution of Mod 035,” the Department said in an Aug. 28, 2013, letter denying URS’ termination request. DOE went on to say, “As the contractor with expertise in such regulatory matters, URS should have understood EPA’s inferences on the SPRU’s NESHAPS compliance status. Thus, both parties entered into Mod 035 with the mutual recognition of acceptable risk.”
