The conference report for the National Defense Authorization Act for fiscal 2017, which the House of Representatives approved Friday, strips out language from an earlier version of the bill that could have given the Energy Department a route to kill the embattled MOX project at the Savannah River Site in South Carolina.
In its last budget proposal, the Obama administration requested $270 million specifically for winding down construction of the plant being built to convert 34 metric tons of excess nuclear weapon-usable plutonium into commercial reactor fuel. The House and Senate versions of the NDAA both countered by authorizing $340 million expressly for ongoing construction.
However, the House bill contained an escape clause under which the secretary of energy could waive the mandate to conduct construction and support operations for the Mixed Oxide Fuel Fabrication Facility by meeting certain conditions. Those would include submitting to Congress an updated performance baseline and project support for the MOX program and a commitment “to remove plutonium from South Carolina and ensure a sustainable future for the Savannah River Site.”
House and Senate conferees eliminated that option from their conference bill. Instead, “The House recedes with an amendment that makes certain technical and conforming amendments to the Senate provision and that directs the Secretary of Energy to carry out construction and project support activities relating to the MOX facility,” according to the conference report released Wednesday.
The NDAA conference language calls on the U.S. Army Corps of Engineers’ Chief of Engineers, acting as an owner’s agent for DOE, to prepare a report on the “contract for the construction, management and operations of the MOX facility,” covering contractual, technical, and managerial risks for the agency and its project contractor, CB&I AREVA MOX Services. The report would also consider parts of the contract that could be shifted to a fixed-price provision, fixed-price with incentive fee provision, or other contractual method to lower both risk to DOE and the project’s cost.
Government contractors generally do not care much for straight fixed-price contracts, under which they would receive no extra payment if a change in scope makes the project more expensive. Nonetheless, an evaluation by the Army Corps of Engineers could be looked on more favorably than having the report prepared by DOE, given the latter’s intention to end the project.
The federal government has already spent $5 billion on the MOX facility, and DOE estimates its life-cycle cost at upward of $50 billion. The department says it could save tens of billions of dollars by diluting the plutonium using existing facilities at Savannah River and storing the processed material at the Waste Isolation Pilot Plant in New Mexico. In making its case to sustain the project, CB&I AREVA MOX Services has put the life-cycle price tag at $19 billion. The sides also differ on the timeline, with DOE saying construction would finish around 2048 and the contractor eyeing completion in 2029.
Complicating matters, Russia in October suspended participation in the bilateral agreement under which it and the United States were to each eliminate 34 metric tons of plutonium. MOX supporters, meanwhile, hope President-elect Donald Trump will look more kindly upon the project.
The Obama White House has objected to language on MOX in the House and Senate NDAAs that made it into the conference report, primarily sustaining the project but also wording “which would require yet another study of the cost and time necessary to complete this facility,” according to the June 2016 statement of administration policy on the Senate bill. “Even with a firm fixed price contract for the MOX Fuel Fabrication Facility, numerous previous studies have confirmed that the alternative disposition method is expected to be significantly faster and less expensive.”
The administration as of Thursday had not issued a formal response to the NDAA conference report. The White House did not respond to a request for comment on the matter.
The House voted 375-34 in favor of the legislation Friday. Senate action is expected early next week.
NNSA Funding
The conference report would allow $13.1 billion in funding for the Energy Department’s semiautonomous National Nuclear Security Administration. That amount is roughly the midpoint of the $13.3 billion authorized under the House version of the bill and the $12.9 billion included in the Senate’s original legislation. The Obama administration had requested $12.9 billion.
Under the $619 billion conference bill, the NNSA could allot $9.4 billion for its nuclear-weapon operations and $1.9 billion for defense nuclear nonproliferation, with the rest going to nuclear reactor work and salaries and expenses.
How much the NNSA will actually receive in the current budget year remains to be seen. The federal government is operating through Dec. 9 under a continuing resolution that freezes funding at fiscal 2016 levels. That puts the NNSA at $12.5 billion on an annualized basis.
Congress appears likely to approve another continuing resolution through March, giving the incoming Trump administration time to put its imprimatur on a final spending plan through Sept. 30.
The House and Senate conferees also agreed to limit NNSA spending on nuclear weapons dismantlement and disposition to $56 million annually from fiscal 2017 to 2021. In addition, apart from a few exceptions, “none of the funds authorized to be appropriated by this Act or otherwise made available for any of fiscal years 2017 through 2021 for the National Nuclear Security Administration may be obligated or expended to accelerate the nuclear weapons dismantlement activities of the United States to a rate that exceeds the rate described in the Stockpile Stewardship and Management Plan schedule,” the conference report says.
The Obama administration requested $68.9 million for weapons dismantlement and disposition operations in fiscal 2017, the NNSA said Thursday. “This budget line item includes funding not only for weapons dismantlement (removal of the nuclear explosive package and high explosives) at [the Pantex Plant in Texas], but also for the disposition of all other components and materials within the dismantled weapon, some of which can be reused in life extension programs,” according to an agency statement.
The NNSA budget request for this work is nearly $17 million above the enacted amount for fiscal 2016, partly to help meet the administration’s effort to accelerate nuclear warhead dismantlement by 20 percent. The agency intends by fiscal 2021 to dismantle all weapons retired before fiscal 2009, one year earlier than previously planned. The actual dismantlement rate is classified.