U.S. senator criticizes incentive pay for work at Hanford vit plant

A U.S. senator criticized incentive pay given to Bechtel National for its work at the Hanford vitrification plant during a hearing Thursday on Department of Energy environmental cleanup contracting policies.

Cleaning up radioactive waste and contamination left from past production of nuclear weapons, much of it at Hanford, is important work, said Sen. Claire McCaskill, D-Mo., chairwoman of the Homeland Security and Government Affairs Subcommittee.

DOE environmental cleanup work is estimated to cost $270 billion through 2087, she said.

"When hundreds of billions of taxpayer dollars are at stake, we need to make sure those dollars are not just being squandered," she said.

Across the DOE environmental cleanup complex, almost $4 billion in performance pay was awarded to contractors between 2002 and 2012 despite poor performance and, in some cases, before required work had been completed, she said.

She used Bechtel as an example. Between 2009 and 2012 the Department of Energy paid the company $24.2 million of the $38.6 million in award payments possible, in part because it met cost and schedule targets and resolved technical challenges associated with keeping radioactive waste well-mixed in the plant to avoid an unplanned nuclear reaction or buildup of flammable gases.

But in 2012, the Government Accountability Office found the project was at serious risk of cost overruns and schedule delays and that waste mixing issues had not been resolved, she said.

DOE's reliance on contracts that reimburse costs causes the government to bear the risk of overruns, she said. The cost overrun just on the Hanford vitrification plant is approaching $10 billion, she said.

Until a few months ago DOE's environmental cleanup office did not require a cost estimate and there still is no requirement that the estimate be well-documented or accurate, she said. One GAO official recently told the panel that writing a number on a piece of paper would meet the requirement.

She also criticized DOE for not adequately considering safety in the design phase of projects, leading to problems being discovered during construction. Construction work is stopped at the Pretreatment Facility at the Hanford vitrification plant until technical issues that could affect safe and efficient operations are resolved.

She also questioned DOE's reliance on a relatively small group of contractors, who sometimes compete against each other and other times team up.

"For the taxpayers the cost overruns and schedule delays are the rule not the exception," she said. "We need to find a better way to do this."

The scope of the vitrification plant project has increased from what Bechtel signed up for in 2000, said Michael Graham, Bechtel National principal vice president, defending the contractor's performance.

DOE described it at the time as a pilot project and it was smaller in scale and capability, Graham said.

DOE wanted construction to start as the design was being developed to address the risk of high-level radioactive waste leaking into the ground from aging underground tanks, he said. A multi-billion-dollar, second-phase facility was planned to be built later, he said.

Since 2000, the plant capacity has significantly increased to allow DOE to eliminate the second phase, he said. The pretreatment capacity has been increased by 40 percent and the capability to turn high-level radioactive waste into a stable glass form for disposal has been increased by a factor of four.

Those and other factors were addressed when the cost of the plant was re-estimated at $12.2 billion in 2006, he said. DOE now says that amount may increase.

Bechtel knew that building the plant, which is the size of at least two commercial nuclear power plants, would be a challenge, Graham said.

"Working closely with DOE, we have managed the challenges of new technology, uncertain waste streams from the tanks, evolving requirements, and the need to sustain a complex supply chain during periods of funding uncertainties," he said.

The project is progressing more slowly than Bechtel would like as DOE looks at critical technical decisions, Graham said. Many of those decisions are related to what would happen if the plant receives waste that does not meet the plant's waste acceptance criteria. Resolution of the issues have had significant impacts on costs and schedule.

But the plant is designed to safely treat most of the 56 million gallons of radioactive tank waste, he said.

"We simply must get on with it," he said. "As you know the situation with the tanks continues to deteriorate. That is the real risk."

Joseph Bader, a Defense Nuclear Facilities Safety Board member, said construction of the plant while the design was in progress has led to technical problems.

"DOE began a significant redesign of the facility in 2009, when the design was already more than two-thirds complete and construction of the (vit plant) facilities ranged from about one-quarter to halfway done," according to written testimony from the defense board. "As part of the redesign, the project proposed removing or reducing many safety-related controls. The board did not agree and was concerned that safety was not appropriately implemented in the design at this very late stage."

The removal of controls was proposed despite the existence of numerous technical issues that still needed to be resolved and was not consistent with the principle of early integration of safety in design, the board said.

The use of technologies unproven for their application at the plant has resulted in DOE struggling to integrate safety into the design, as the plant is already partially built, the board said.

"It also contributed to the development of an acrimonious relationship within the project contractor's organization between the people responsible for the safety basis and those who did engineering," the board said. "The acrimony made the resolution of safety issues extremely difficult and damaged the project's safety culture."

The DOE Office of Inspector General is completing a review of alleged design quality problems at the vitrification plant, said Inspector General Gregory Friedman.

Friedman also brought up Bechtel fee payments in his written testimony, referring to a $15 million payment by DOE to Bechtel a decade ago for production of a tank for the plant that later was found to be defective. DOE demanded repayment of the fee, but it was not reimbursed, he said.

DOE could not supply documentation to explain or support the rationale for not recovering the fee, Friedman said.