The Department of Energy could levy up to $33 million in disincentive fees against Parsons Government Services for the contractor’s failure to control costs and meet deadlines at the Savannah River Site’s $2.3 billion Salt Waste Processing Facility (SWPF), the agency said this month.
Parsons is pushing back, saying the agency is not acting in good faith and is misstating the terms of their contract.
Parsons is on the hook to design, build, test, and start up SWPF by January 2021. The contractor is also expected to operate the facility for the first year of operations before turning it over to Savannah River’s liquid waste contractor. Late last year, Parsons and DOE pushed startup of the plant to December 2019 from December 2018.
In a March 19 letter obtained by Weapons Complex Morning Briefing, DOE Contracting Officer Justin Speering wrote that Parsons is “rapidly approaching” the contract value for commissioning — testing the facility to ensure it is ready for operations.
The Energy Department thought commissioning SWPF would cost between $350 million and $380 million. Under Parsons’ contract, DOE and the company will split the cost of overruns 50-50. In this case, the overruns would total about $15 million, Speering wrote to Frank Sheppard, Parsons senior vice president and SWPF project manager.
The federal government will take an additional $3 million, capped at $18 million, for every month Parsons fails to submit a declaration of readiness to proceed so the Energy Department can start its operational readiness review at the SWPF. Parsons was to submit its readiness declaration on March 31, 2019.
In an undated response letter also obtained by Weapons Complex Monitor Parsons wrote that “[t]here is no contractual basis for such withholdings in this cost reimbursable contract.”
It was not clear Monday whether Parsons had transmitted that letter to DOE.
The 140,000-square-foot Salt Waste Processing Facility is intended to process roughly 30 million gallons of radioactive salt waste stored in Cold War-era, underground waste tanks at Savannah River.
