There You Go Again

In a July 12 report to the Senate Appropriations Subcommittee on Energy and Water Development on the planned Uranium Processing Facility (UPF) in Tennessee, the Government Accountability Office (GAO) validated many of the concerns that have been raised about the project, including its burgeoning costs and endless delays as a result of management incompetence.

The UPF will replace several facilities at the aging Y-12 National Security Complex in Oak Ridge, Tennessee, which currently processes highly enriched uranium to manufacture nuclear components for weapons, dismantle nuclear warheads, and recycle highly enriched uranium for use in submarine reactors.  In May, Republican Senator Lamar Alexander, Ranking Member on the Senate Energy and Water Appropriations Subcommittee, expressed his frustration with the construction of the UPF in his home state, fuming, “I’ve pretty well had it with these big Energy Department projects that start out costing a billion dollars and end up costing $6 billion.”

The UPF is one of the poster children of the “Energy Department projects” described by Alexander, especially those overseen by the National Nuclear Security Administration (NNSA).

The original, 2004 cost estimate priced the final cost of the UPF at between $600 million and $1.5 billion.  The latest official estimate puts the price tag between $4.2 billion and $6.5 billion.  And the recent GAO report calls this estimate into question, stating, “confidence in the cost estimate range approved in June 2012 has been reduced, and it is not clear if the cost estimate range remains valid.”

The next detailed cost estimate and baseline for the UPF will not be released until the design is at least 90 percent complete, which is not expected until this time next year due largely to management incompetence.  According to NNSA spokesman Steven Wyatt, the “single biggest factor” delaying the design schedule was the August 2012 conclusion by contractors that the UPF’s roof must be raised 13 feet, an additional 12 inches of concrete are necessary for the facility’s foundation, and the thickness of the exterior walls of the UPF must be increased by 12 inches in order to accommodate work at the facility.  According to the GAO, fixing these design flaws, which will cost $540 million, “occurred because the contractor did not adequately manage and integrate the design work subcontracted to the four other contractors.”

The “primary factor” leading to GAO uncertainty in the current price estimate for the UPF is “overly optimistic” NNSA assumptions over a number of years. The report showed that initial UPF cost estimates were “largely based” on the estimated cost to construct another facility - the Highly Enriched Uranium Materials Facility (HEUMF), despite the obvious differences in the operations of the facilities. The UPF is designed to process highly enriched uranium, while the HEUMF simply acts as a storage facility for such material.  Additionally, the NNSA ignored the possibility of budget constraints in its UPF cost estimates in 2010 and 2011.  More drawn-out funding will push the price tag to $10.3 to $11.6 billion, according to NNSA's February 2011 guidance, included in the GAO report.

Whether it be the Mixed Oxide (MOX) facility in South Carolina, the (now defunct) Chemistry and Metallurgy Research Replacement Facility (CMRR-NF) at Los Alamos National Laboratory, the Pit Disassembly and Conversion Facility (PDCF) in South Carolina, or the UPF - mismanagement leading to skyrocketing costs and unending schedule setbacks has become par for the course for major NNSA construction projects.

You can understand the growing Congressional skepticism surrounding shoveling money into another massive NNSA nuclear (mis)adventure - the B-61 Life Extension Program (LEP), which is exhibiting the same ills as the aforementioned projects.

Long ago, the GAO sounded the alarm on the Department of Energy’s “contract and project management” program, as a government program at high risk for fraud, waste, abuse, and mismanagement.  In the wake of another stinging report, it’s clear that NNSA has yet to get its act together.