GAO Questions DOE’s Planning for New Hanford Vit Plant Facilities
Mike Nartker
WC Monitor
5/8/2015
The price tag for key portions of the Hanford Waste Treatment Plant long seen as being less difficult to accomplish may be set to significantly increase, with contractor Bechtel National having estimated that the work could cost up to almost $6 billion to complete, according to a Government Accountability Office report released late this week. The report, which examines the Department of Energy’s plans for two new facilities for the WTP, provides details about contract modification proposals Bechtel National submitted last fall for addressing technical risks at the WTP’s Low Activity Waste Facility and for completing the LAW Facility, the vit plant’s Analytical Laboratory and balance of support facilities (collectively known as ‘LBL’). “Bechtel is working with the Department to define the work to be performed. It is extremely premature to discuss cost,” contractor spokesman Fred deSousa said in a written response late this week. “We are optimistic about reaching agreement and moving forward with completing the phased approach to address Hanford’s tank waste.”
The Department of Energy and Bechtel National are working to implement a phased approach for completing the WTP that entails focusing first on the LBL facilities, which DOE and contractor officials have long said do not have the same technical challenges that have significantly slowed progress in completing the other two main portions of the vit plant—the High-Level Waste and Pretreatment facilities. DOE is now looking to implement an effort, dubbed ‘Direct Feed LAW,’ to begin operation and waste processing at the LBL facilities ahead of the other portions of the plant, potentially by 2022. The DOE Office of Environmental Management declined to provide additional comment on the GAO report late this week.
DOE, Bechtel Appear to Differ on Costs for Completing LBL
A footnote in this week’s GAO report reveals that last fall, Bechtel National submitted a contract modification proposal that puts the cost of completing the LBL facilities, including modifications to the LAW Facility to allow for direct feed and the contractor’s own fee for the work, at approximately $3.7 billion. Bechtel National declined to comment on the basis for its estimate late this week, saying such information is business sensitive.
DOE, though, appears to have some concerns with Bechtel National’s estimate, according to the GAO report. “According to DOE headquarters officials, these costs are estimates developed by the contractor that have not been validated or accepted by DOE. The department has not agreed to these estimated costs. Additionally, the department has not concurred with or agreed to the inputs that form the basis of these estimates,” the report states, adding, “It is possible that the cost estimate reflects the contractor’s negotiation strategy and may not accurately reflect estimates for the scope of work and the terms ultimately agreed to in the final modification.”
Design Review Finds More Than 500 ‘Vulnerabilities’ at LAW
In addition, Bechtel National has estimated it could cost up to an additional $2 billion to address technical risks at the LAW Facility, according to the GAO report. Last October, Bechtel National submitted a contract modification proposal “to address all risks to completing the Low Activity Waste Facility,” which estimated the contractor would need $151 million to $2 billion, the report says. The contractor estimated that “most likely scenario” would be $952 million, the GAO said.
Bechtel’s estimate included the cost of addressing issues identified in a DOE design review conducted last year. The review examined 13 of the 26 systems in the facility, and found 536 “vulnerabilities,” 110 of which could result “in ‘severe consequences’ to system operability,” the report says. The results of the LAW Facility design review have not yet been made public. As one example of the issues discovered during the review, the GAO report cites weaknesses found in the LAW Facility’s ventilation system that could “result in inadequate confinement of radioactive gases.” The report notes, “DOE does not know the potential level of radiation exposure to operations and maintenance personnel should such a leak occur, according to the February 2014 review.”
Bechtel National has estimated it could cost anywhere from $10 million to $928 million to address the issues identified in the design review, “with $525 million being the most likely scenario, according to contractor documents,” the GAO report says. “DOE headquarters officials told us that the numbers in the upper range of the estimate reflect the costs of mitigating all risks. They added that, in all likelihood, not all risk will be realized, so mitigating some of the risks may not be necessary.”
DOE Cost Estimates for New Vit Plant Facilities Not ‘Reliable’
The GAO also questioned in its report DOE’s planning for two new facilities intended to aid the Hanford vit plant in its waste processing mission. One is an interim pretreatment system to prepare waste for direct feed to the LAW Facility, while the other—the Tank Waste Characterization and Staging (TWCS) facility—is intended to help prepare waste for feed into the High-Level Waste and Pretreatment facilities and address some of the technical challenges those two sections of the plant have been facing. DOE has estimated the interim pretreatment system could take about six years to complete with costs ranging from $243 million to $375 million, and the TWCS facility could take six-to-eight years to complete with costs ranging from $390 to $690 million, according to the report.
The GAO, however, said DOE’s estimates “cannot be considered reliable” because they do not confirm to industry best practices. “We found that the rough-order-of-magnitude cost estimates do not comply with industry best practices, in large part because they excluded costs for key activities that the department knows it will incur if the projects are approved, and the rough-order-of-magnitude schedule estimates do not comply with industry best practices because key activities were not logically sequenced with other activities,” the report says.
DOE also may have failed to consider other alternatives that could be less costly because it proposed the two new facilities on the basis of similar past projects, according to the report. “Although DOE’s project management order requires it to explore a variety of options in devising strategies or projects to meet its mission needs, DOE has defined narrow statements of mission need to effectively preselect projects that are similar to past proposals and chosen largely on the basis of expedience,” the GAO said. “By narrowly defining the mission need, DOE effectively excluded from consideration other alternatives to addressing the tank waste treatment mission and the danger posed by the potential leakage of waste from the tanks. These two projects might represent the best path forward, but without unbiased statements of mission need, DOE is unable to explore other alternatives, including some that might be less costly solutions.”
In an attached management response to the report, acting DOE cleanup chief Mark Whitney said the Department was concerned that the GAO report suggests it should re-evaluate the two planned facilities. “After significant evaluation, DOE has determined that beginning to treat waste as soon as practicable through a phased approach to Waste Treatment and Immobilization (WTP) Plant project construction is the only practicable and permanent way to address the concerns associated with tank waste,” he said. “DOE’s considerable analysis demonstrates that a phased approach, beginning with vitrification of low activity waste as soon as practicable, is the best approach to moving forward with WTP while working to meet the legal obligations that govern tank waste cleanup.”
GAO Says DOE Should Consider Slowing Work
In its report, the GAO recommended that DOE should consider potentially limiting construction activities at the LAW and High-Level Waste facilities “until aggressive risk mitigation strategies are developed and employed to address technical challenges that DOE, the contractor and others have identified but not yet resolved.” While DOE and Bechtel National have steadily moved forward with the LBL facilities, work was significantly ramped down at the High-Level Waste Facility in 2012 to address technical challenges. Last fall, Bechtel National received approval to resume “full production engineering” at the facility, which allows the contractor to proceed with all engineering work needed to finalize the design, as well as some limited procurement and construction activities.
However, Whitney appeared to downplay the GAO’s recommendation in his management response. “The Department has already restricted construction for the High-Level Waste Facility and implemented risk mitigation strategies. … A specific set of criteria has been established for the resumption of HLW construction,” Whitney said. “With regard to the LAW Facility, construction is nearly complete,” he said, adding, “The WTP Federal Project Director has a detailed risk register for the LAW Facility for each remaining risk, which is regularly being addressed and proactively mitigated as the LAW facility approaches completion.”
DOE Should Employ ‘Owner’s Agent’ for Project, GAO Says
The GAO also recommended that DOE enlist an “owner’s agent” to help oversee Bechtel National’s design work at the WTP. “In the absence of employing aggressive risk mitigation strategies, DOE will have little assurance that technical challenges will be solved or that emerging ones will be mitigated in design, which may result in portions of facilities’ designs either being unchecked or progressing significantly before problems are identified,” the report says.
Whitney expressed support for such a recommendation in his management response, saying the DOE Office of River Protection at Hanford would evaluate the best way to move forward. “The Department believes that an independent review and evaluation capability can add value to effective project management, and the Office of River Protection will pursue alternatives to secure the benefits of an owner’s agent capability,” Whitney said. “To that end, the Office of River Protection will develop and analyze alternatives to enhance the capability and effectiveness of the Office’s oversight responsibilities. Then, after the best alternative is selected, it will be expeditiously implemented.”
