Todd Jacobson
NS&D Monitor
4/24/2015
It could cost nearly $52 billion to complete the Mixed Oxide Fuel Fabrication Facility and run it while downblending and disposing of surplus weapons-grade plutonium would be a significantly cheaper approach, according to a recently completed study by The Aerospace Corporation that drew immediate criticism from South Carolina’s Congressional delegation and contractor CB&I AREVA MOX Services. The Congressionally mandated study eclipses the Department of Energy’s own estimates for completing and running the MOX facility. The Department said it would cost about $29 billion in construction and lifecycle costs for MOX last year, well above previous estimates, though DOE’s attempts to put the plant in cold shutdown were stymied by Congress, which has successfully kept construction going on the plant. Downblending the 34 metric tons of plutonium and disposing of it would cost about $17.2 billion, the report said. The NNSA submitted the report to Congress this week, and while the full report is marked “Official Use Only,” NS&D Monitor obtained a one-page summary of the study.
About $4.4 billion has already been spent on building the plant, which is about 65 percent complete, according to contractor CB&I AREVA MOX Services. The Aerospace report found there to be $47.5 billion in additional “to-go” costs to complete the project. “The Aerospace report finds that the total program life-cycle to-go costs for the MOX fuel option will be significantly higher than initially estimated,” Energy Secretary Ernest Moniz wrote in a letter to lawmakers yesterday that was obtained by NS&D Monitor. “The total costs and timeline are also significantly influenced by the annual rate of appropriation.”
In a joint statement, South Carolina Sens. Lindsey Graham (R) and Tim Scott (R) and Rep. Joe Wilson (R) said they found it “difficult to understand” how it would cost so much to complete the project when it’s already 65 percent built. “A week before the House Armed Services and Appropriations Committees consider appropriations for this facility—we are concerned with the Obama Administration’s intentions to fulfill our international obligations,” the lawmakers said. “MOX will serve as our country’s means by which to honor a nuclear nonproliferation agreement with the Russian Federation. At a time when tensions are high between our two nations, we cannot afford walk away from our side of the Agreement.”
CB&I Project Services Criticizes Report for ‘Throwing Darts at a Wall’
The Aerospace report uses $500 million a year as a funding baseline for its projections. If the project was funded at $375 million a year, it would cost another $114 billion on top of the $4.4 billion already spent on construction, the report said. In a statement, Bryan Wilkes, a spokesman for CB&I Project Services Group, said the contractor “vigorously” disagrees with the report’s findings. “At this point, it seems like someone is just throwing darts at a wall with numbers on it,” Wilkes said.
He said the figures are “inaccurate and unsubstantiated,” he said. “By our calculations, it will take an additional $3.3 billion to complete the project, and it will be done in 5-9 years, depending on the amount of annual funding appropriations. It is also calculated to cost $8 billion to operate the plant over its 20-year cycle. There is over $1.5 billion in equipment on site and ready to install. Most equipment for the facility has been purchased, so it will be mostly labor costs from here on out.”
Wilkes also noted that negotiations last year on a new contract for the project would have shifted much of the risk in building the facility to the contractor. Those negotiations broke down and a new contract has not been completed. “The last offer a team of senior corporate leaders made to the Department of Energy and NNSA was never accepted or replied to, even after repeated attempts,” Wilkes said. “If it had been accepted, the work would have been completed with greater risk on the contractor and at a fraction of the cost of what the new numbers allegedly say.”
House Appropriators Raise Questions About Analysis of Downblending Option
In what appears to be a response to the report, the House Appropriations Committee amended its version of the Fiscal Year 2016 Energy and Water Appropriations Act this week to raise concerns about the analysis of the downblending and disposal option. In the amendment, which was adopted by voice vote April 22, House appropriators said the study does not provide a “full accounting” of the life cycle cost of downblending and disposal at the Waste Isolation Pilot Plant or another disposal facility. “For instance, the Department’s analysis does not account for the costs of operating and emplacing waste in WIPP for another twenty years beyond its current closure date of 2030,” the language added to the report accompanying the bill said.
The report was also amended to note that DOE would need significant funding above the Administration’s $345 million budget request in FY 2016 to cancel the MOX project and pursue downblending. The report directs DOE to conduct a full programmatic analysis of downblending and disposal at WIPP or elsewhere within 18 months of the enactment of the bill. The bill fully funds the $345 million request. “Considering the high near-term costs of either option, more accurate information on the full costs of the downblending option must be developed before such an alternative should be pursued,” the report said.
Concerns Previously Raised About Study
Two members of the House Armed Services Committee, including South Carolina’s Wilson, previously raised concerns about the NNSA’s decision to use The Aerospace Corporation to conduct the study. In a March 25 letter to Moniz, Wilson and Rep. Robert Brady (D-Pa.) said they were “perplexed” by the decision to select Aerospace, a Federally Funded Research and Development Center sponsored by the Air Force. “We fail to understand why DOE did not choose a FFRDC that has broader expertise in nuclear materials disposition and nuclear construction,” Wilson and Brady wrote. “This decision seems comparable to selecting a nuclear engineering company to review a satellite program at the Department of Defense.”
The lawmakers also suggested the company’s work on the B61-12 life extension program represents a conflict of interest. “We understand that Aerospace is currently providing engineering advisory support for the B61 gravity bomb life-extension program; a program whose funding would be boosted by redirecting funds intended for the MOX project to the nuclear weapons modernization program,” they wrote. “We question whether Aerospace can conduct a fair and unbiased study in light of its role in the B61 program.”
Not Quite as Predicted
The Aerospace study was required by Congress in the Fiscal Year 2015 omnibus appropriations act. A separate study is also looking at all other options to MOX, and that study is expected to be completed in September. DOE and NNSA attempted to put the MOX project in cold standby last year due to rising costs but Congress balked, boosting funding for the program and requiring construction to continue.
The Obama Administration requested $345 million in Fiscal Year 2016 as a placeholder for the controversial MOX project, matching the level at which Congress funded the program in FY 2015, while the reviews are conducted. Earlier this year, Moniz said he didn’t expect the studies to reveal significant differences from the Department’s own MOX study, which was completed last year. That study revealed that estimated construction costs for the facility had risen to approximately $10 billion, up from a previous estimate of $7.7 billion and an earlier baseline of $4.86 billion. “We’ll see what comes back,” Moniz said. “Personally I would be surprised if we would find anything that is dramatically different from our first internal analysis but that remains to be seen.”
FY 2016 budget documents indicate that the latest estimated cost of the entire project is $12.7 billion (which includes D&D and other costs), with $9.1 billion estimated for construction. Estimated annual operating costs also jumped from $543 million a year to $671 million a year, according to the budget documents. The budget documents also reference a recent Army Corps of Engineers study that projected the cost of the facility to be between $10-$13 billion.
