No Subject

[MIannaccone@dhhs.state.nh.us]

07:39 PM ET 05/08/00

Energy Dept. Canceling BNFL Deal

 By H. JOSEF HEBERT=
Associated Press Writer=
        WASHINGTON (AP) _ Stung by soaring costs, the Energy Department
will end its contract with a British company for cleaning up the
radioactive waste now kept in underground tanks at the Hanford
weapons complex in Washington state, officials announced Monday.
        The contract with BNFL Inc., a subsidiary of British Nuclear
Fuels Inc., had been in doubt since the company on April 24 said it
couldn't do the job for less than $15.2 billion. Two years ago,
when BNFL was hired the company estimated the cost at $6.9 billion.
        The skyrocketing costs leading to Monday's termination of the
contract represents a major blow to the Energy Department's efforts
to ``privatize'' complex nuclear waste cleanup projects. Under this
approach, companies would be hired to complete the project, assume
all risk and not be paid until after the work is completed.
        ``We are not giving up on the concept of privatization in
general,'' said Deputy Energy Secretary T.J. Gauthier. But he added
this approach would be limited to projects with fewer uncertainties
than the Hanford cleanup.
        At Hanford, BNFL had agreed to design, build and operate a
high-technology plant that would turn 54 million gallons of highly
radioactive nuclear waste, now in 177 underground storage tanks,
into glass logs that in the future could be buried safely at a
government disposal site.
        Energy Secretary Bill Richardson called BNFL's latest cost
estimate ``outrageously expensive and inadequate in many ways.''
Richardson previously had expressed concern about ``a disturbing
trend of unacceptable and unexplained budget escalations''
involving BFNL's Hanford project.
        Gauthier said that BNFL would continue some design work for
several months, but then the rest of the work _ from design to
construction _ would be turned over to other companies to be
selected by competitive bids. He said a decision on the new
contract would be made by the end of the year.
        He said the payment to BNFL would probably be in the range of
$200 million to $300 million for the two-years of design work but
that he could not be more specific. It was not clear whether the
government would have to pay a penalty for ending the contract
although Gauthier said there was a provision for termination.
        Gauthier told reporters that the department stands by its goal
of having the plant completed by 2007 and the waste treatment
completed by 2018 although some short-term deadlines _ such as when
construction may begin _ may have to be put back.
        ``We are committed to cleaning up the Hanford site as rapidly as
possible,'' Richardson said in a statement. ``We should be able to
meet our long-term schedules for operating a waste treatment
plant.''
        BNFL was supposed to have completed 30 percent of the plant's
design work by now but less than that is completed, Gauthier said.
He said while the technical design of the plant so far appeared to
be sound, the department had serious concerns about the
``management and business approach'' taken by BNFL.
        BNFL is involved in other waste cleanup projects at Energy
Department facilities in Colorado, Idaho, South Carolina and
Tennessee. Last week, Richardson sent an independent review team to
BNFL's Sellafield facility in Manchester, England, to examine the
company's procedures and operations as they apply to its work in
the United States.
        That report has not yet completed, officials said.
        But DOE officials were clearly angry over the sudden price
escalation involving the Hanford project.
        Gauthier said BNFL will be allowed to submit a bid for the new
contract but he made it clear the company's chances may be slim.
``Why should we believe in their bid when we've just had this
experience? We've been pretty unhappy with their performance. ...
We're very disappointed to have to take this action and to have to
change directions now,'' he said.

submitted by,
M.Iannaccone,
Health Physicist
miannacc@dhhs.state.nh.us

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