March 17, 2014

GAO: MOX BASELINE COULD INCREASE $2.8B WITH THREE-YEAR DELAY

By ExchangeMonitor

The new baseline for the Mixed Oxide Fuel Fabrication Facility could increase the cost of the project by $2.8 billion and push back the startup of operations three years, an official from the Government Accountability Office said yesterday at a House Appropriations Energy and Water Development subcommittee hearing. In prepared testimony GAO Natural Resources and Environment Director David Trimble said that the Department of Energy “is currently forecasting an increase in the total project cost for the MOX facility from $4.9 billion to $7.7 billion and a delay in the start of operations from October 2016 to November 2019.” He added that DOE is evaluating a project baseline change proposal prepared by MOX construction contractor Shaw AREVA MOX Services, and that “the cost increase and schedule delay will not be known until DOE completes its review of the contractor’s proposal and DOE’s project oversight office completes an independent cost estimate.” NNSA expects to complete its review of the baseline change proposal by the end of the fiscal year, spokesman Robert Middaugh said. The GAO has been undertaking a review of the National Nuclear Security Administration’s MOX project that is also expected to be out later this year.

Due to the cost increases, Shaw AREVA MOX Services earned no incentive fee out of $30 million available in fiscal years 2011 and 2012, NNSA Associate Administrator for Acquisition and Project Management Bob Raines said at yesterday’s hearing. “There is a cost curve, they didn’t meet the cost curve in those two years. The total incentive fee they could’ve earned was $30 million, 14.5 one year and 15.5 another year and they earned zero in both of those years. That’s because we saw that the project wasn’t hitting their cost performance targets,” Raines told NW&M Monitor following the hearing. However, they did earn some award fee, adding up to 29 percent of the fee that was available in FY 11 and 19 percent of the FY 12 available fee. “They lost fee for cost performance and project management performance and they earned a substantial percentage of the fee for the areas they’re doing well in. They earned fee for safety and they earned fee for quality assurance,” Raines said.

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