Morning Briefing - April 17, 2018
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April 17, 2018

DOE Justified MOX Project Fee Claw-Back With Bad Reading of Contract, Contractor Says

By ExchangeMonitor

The Department of Energy relied on a flawed reading of a contract to justify its 2016 decision to take back some $20 million in fees from CB&I AREVA MOX Services, the company argued in the latest legal volley on an over-budget plutonium disposal plant being built in South Carolina.

In a 2016 lawsuit filed in the U.S. Court of Federal Claims, MOX Services seeks $200 million in damages and fees from DOE, including $20 million the contractor said its customer illegally clawed back that year on the contract to build the Mixed Oxide Fuel Fabrication Facility (MFFF) expired.

In court papers filed in late March, DOE said it was allowed to take the $20 million back because the faciilty was supposed to be built in the first option period of the contract, which ran out in 2016. In an April 12 court filing, MOX Services said DOE was not reading the contract correctly, and that the pact permits the agency to make a decision about fees “only after the MFFF construction is completed and not sooner.”

MOX Services requested expedited partial payment in the lawsuit in late December, after which the contractor and its customer filed multiple written arguments over the $20 million. In its April 12 filing, MOX Services asked Judge Thomas Wheeler either to decide the matter once and for all based on the written arguments, or to schedule a date for oral arguments about the proposed repayment.

Whatever Wheeler decides, the $20 million is only the tip of the iceberg in the suit, which barring a sudden settlement could drag out for years.

The MFFF is designed to turn 34 metric tons of surplus weapons-usable plutonium into commercial reactor fuel under an arms control pact with Russia. The facility is over budget and behind schedule: something for which DOE and MOX Services blame one another. When DOE cut an MFFF prime contract with a MOX Services predecessor company, the agency thought the plant would cost about $4 billion and be done in 2016.

The Energy Department wants to cancel the MFFF and instead bury the plutoniumin the deep-underground Waste Isolation Pilot Plant near Carlsbad, N.M. Congress has yet to authorize the cancellation.