Audit: Faulty vit plant purchases costly for DOE

Piping for the complex air-filtration system at the Hanford vitrification plant’s Low Activity Waste Facility is among more than $4 billion in purchases made for the plant.
Piping for the complex air-filtration system at the Hanford vitrification plant’s Low Activity Waste Facility is among more than $4 billion in purchases made for the plant. Bechtel National

The Hanford vitrification plant contractor, Bechtel National, has been slow to spot problems with items it purchases for the huge plant and has not been aggressive enough about recovering the costs, according to a new audit by the Department of Energy Office of Inspector General.

In one example, Bechtel did not identify piping for high-level radioactive waste that had a bend 90 degrees off from specifications until September 2013, more than nine years after it was delivered to Hanford, the audit said.

In another example, Bechtel recovered only $29,100 of the $138,822 cost of rework for duct support welds at the plant’s High Level Waste Facility, the audit said.

DOE officials told the Office of Inspector General they are “encouraged” that all findings in the audit had been previously identified either by DOE or Bechtel.

The Office of Inspector General countered that it took the audit to point out the magnitude of the issue, DOE’s ineffective oversight and Bechtel’s problems resolving the causes.

The audit looked at about $4 billion in parts and materials purchased through September 2014 for the vitrification plant. Construction has been underway since 2002 on the plant, which is to turn radioactive waste left from the past production of plutonium for the nation’s nuclear weapons program into a stable glass form for disposal.

Problems with 44 percent of the 1,365 items that did not meet specifications were not identified until at least two years after the items arrived at the Hanford nuclear reservation, the audit said.

In November 2013, Bechtel determined that 55 of 64 installed stair sections for the High Level Waste Facility had stair risers that did not meet height specifications and could cause a safety hazard because they were part of designated routes out of the facility. They had been delivered to Hanford and installed between 2004 and 2012.

Bechtel had purchased the stair at a cost of $654,000 and the initial estimate to repair them was $1.8 million. A settlement for $900,000 was reached with the supplier in May 2015.

In another case, an electrical control panel for one of the plant’s support facilities, the Nonradioactive Liquid Waste Disposal Facility, was delivered in 2007. It took six years to notice that the panel was not certified by the Underwriters Laboratory or another nationally recognized laboratory. More testing found other deficiencies.

The control panel was part of a purchase order totaling $233,381. Bechtel estimating that replacing it would cost $325,000, with DOE bearing the cost, the audit said.

Bechtel took one year or longer to resolve action to recover costs for about 22 percent of the problem purchases, the audit said. Most contracts included a “back charge” clause allowing Bechtel to make repairs if a vendor could not and then bill the cost of the rework plus a markup of 60 to 100 percent.

“However, Bechtel often did not recover any costs or the back charges were settled at significantly less cost,” the audit said.

In one case, Bechtel did not take action on equipment that did not meet design requirements for two years because it was not considered a priority. In the meantime, the vendor went out of business.

When Bechtel found the welds to support ducts in the High Level Waste Facility needed to be reworked, it was quick to issue the back charge. However, it back charged only an estimated repair cost of $29,100 rather than the actual $138,822 cost of rework, which was without the markup, the audit said.

DOE questioned whether some information in the report is accurate.

“We agree with the DOE response that the report contains some comments that are taken out of context or are factually inaccurate,” Bechtel said in a statement.

The problems identified in the audit were caused by weaknesses in Bechtel’s quality assurance program, the audit found.

“Although Bechtel had procedures in place to prevent or identify nonconforming items, they were not always performed effectively,” it said. In addition, Bechtel’s procedures did not address resolving issues quickly.

In 2014 Bechtel issued a plan to address findings by DOE and others, which included some of the findings in the Office of Inspector General audit made public Monday.

“It is commendable that Bechtel is in the process of implementing corrective actions to address many of the issues identified in this report,” the report said. But Bechtel has tried to correct issues in the past, only to have them reappear, it added.

The plan found that Bechtel could save $1.9 million through 2016 by making changes to its back charge process.

The Hanford DOE office overseeing work at the vitrification plant, the Office of River Protection, has performed assessments and surveillance of Bechtel’s purchasing and material management, but its focus is on areas with higher risks, the audit said. Due to budget limits DOE had relied on Bechtel to inform it of issues. It had discussed back charges on high visibility projects that could be considered high risk, but had not reviewed Bechtel’s back charge log.

DOE plans to make several changes, which are in line with the audit report’s recommendations. It will perform annual assessments of Bechtel to address shortcomings identified in the report. It also is directing Bechtel to also review its policies and procedures and make any changes needed.

DOE will add standards both related to back charging and making sure that purchased items meet specifications to Bechtel’s annual performance review, which is linked to the contractor’s incentive pay, starting next year.

Annette Cary: 509-582-1533, @HanfordNews