Total Value of Proposed Contract Could Reach Approx. $120 Million
Kenneth Fletcher
NS&D Monitor
4/25/2014
In a new effort to continue to fund the American Centrifuge project, USEC is looking to serve as a subcontractor to Oak Ridge National Laboratory, though the Department of Energy has yet to give its approval. The proposed subcontract, which also has to be approved by a bankruptcy court as USEC is undergoing Chapter 11 proceedings, would initially be worth $34 million and run through the end of this year. The subcontract would also have two six-month $42 million option periods that would take it through Fiscal Year 2015 for a total potential value of $118 million.
A DOE research, development and deployment cost-share program supporting the American Centrifuge project concludes at the end of the month, and the subcontract with ORNL contractor UT-Battelle would start May 1. The Department said earlier this month that in order to continue development of a domestic enrichment capacity, Oak Ridge would take over management of American Centrifuge as USEC can not continue to fund the project on its own and cannot currently commercialize the technology.
The Department has about $9.6 million in appropriated funds left for a centrifuge program, but hasn’t yet released them. Approximately $56 million of reprogramming authority is contingent on completion of a cost-benefit analysis that has not yet been submitted to Congress. And DOE has not requested any Fiscal Year 2015 funding for a centrifuge program. This week a Department spokesperson said that a “no-cost” extension of the current program runs through the end of the month and that DOE continues to explore options to meet enrichment needs for national security purposes.
Deal Would Cut Spending by 40 Percent
The proposed subcontract would fund American Centrifuge at about 60 percent of current levels, and would focus on monitoring operations of the currently built cascade of centrifuges. However, it would not fund the centrifuge manufacturing plant at Oak Ridge, and the fate of the manufacturing capability remains uncertain. “The arrival at this proposed agreement after the scoping discussions recognizes the value of the work that has already been done, and the importance of maintaining the centrifuge technology to meet national security needs,” USEC spokesman Paul Jacobson said. “The three main takeways are that it would continue cascade operations, it would continue the research and technology activities at Oak Ridge, it recognizes work of USEC employees and company’s skill so it maintain’s USEC’s role in carrying out the program under a different scope.”
Given the proposed subcontract, the bankruptcy court rescheduled its main hearing on USEC’s disclosure statement to May 20. “A failure to approve the ORNL Agreement and permit the Debtor to obtain funding from ORNL would essentially require the Debtor to completely demobilize the American Centrifuge Project, which could clearly jeopardize its ability to realize its current Chapter 11 objectives,” states a USEC filing in the U.S. Bankruptcy Court for the Delaware District.
