Kenneth Fletcher
RW Monitor
5/9/2014
The National Nuclear Security Administration is transferring $56.65 million from other programs to an effort to preserve the American Centrifuge technology under a new contract being managed by Oak Ridge National Laboratory. The ORNL subcontract, awarded to USEC, is worth $33.7 million through the end of this fiscal year, and has two six-month $42 million option periods that would take it through Fiscal Year 2015 for a total potential value of $118 million. Congress approved the transfer authority in the spending bill it cleared earlier this year, making it contingent on delivery of a cost-benefit analysis on enrichment options. DOE presented a report to Congress last week and outlined where funds would come from, and also provided about $9 million to the program that had already been appropriated. However, DOE has not yet requested the more than $50 million in FY’15 that will be necessary to complete the subcontract.
Until last week, USEC ran American Centrifuge while receiving funds from the Department of Energy under a nearly two-year research, development and deployment program. Though the program was successful in meeting milestones to prove the viability of the technology, given current market conditions USEC is not able to commercialize the plant. Under the terms of the program, DOE was able to take over management of the technology. “The Energy Department is committed to achieving a reliable domestic source of enriched uranium for national security needs,” a Department spokesperson said this week. “Given that USEC is not currently in a position to commercialize the advanced enrichment centrifuge technology utilized in the American Centrifuge Project, the Energy Department is taking actions needed to maintain the technology and enrichment capability as it explores options for the best way to meet U.S. national security needs.”
Funds to Come from NNSA Programs
The initial batch of funding will come from a variety of NNSA accounts. Under weapons activities $37.4 million will come from unearned M&O contractor fee, the bulk of that coming from the B&W Y-12 contract; and $16.2 million will come from DOE and NNSA assessments that did not fully materialize. Under Defense Nuclear Nonproliferation $1.94 million will come from assessments and $0.98 million will come from unearned fee.
USEC said that without additional government funding it would demobilize the project, which DOE fears could cause damage to the centrifuge machines. Instead, DOE aims to preserve the intellectual property and workforce expertise. “The Department has tasked Oak Ridge National Laboratory to assist in developing a path forward that promotes private sector deployment and meets national security needs,” DOE said. “These actions will also support the Department’s efforts to maintain the advanced centrifuge enrichment machines and its plans to transfer property from USEC to the Department in accordance with the terms of applicable leases and agreements, including the steps the Department has taken over the past two years to protect taxpayer interests through taking title to the centrifuge machines.”
Fate of Manufacturing Plant Uncertain
The new program funds the project at only about 60 percent of the level under the RD&D program and is focused on monitoring the currently operating cascade of centrifuges. However, the scope will not support continued manufacturing of the centrifuge machines at a plant in Oak Ridge run by USEC and B&W Technical Services. Last week USEC said that B&W Technical Services Group would transfer its membership in American Centrifuge Manufacturing, LLC, to USEC at no cost, according to a USEC financial filing. USEC declined to comment beyond the financial filing.
