Report to Congress Treatment & Immobilization of Hanford Radioactive Tank Waste

APPENDIX A

TWRS Phase I Authorization-To-Proceed
Decision and Decision Methodology

The Tank Waste Remediation System (TWRS) Part B authorization-to-proceed (ATP) decision described in this report was made using a systematic decision process, which was based on the application of the Cost and Operational Effectiveness Analysis (DoD 1991) decision approach used by other federal agencies. In addition, the process involved extensive independent reviews of both the decision process and the results. The ATP decision and the process for making the decision are summarized here.

The ATP decision process is illustrated in Figure A-1 and included two major parts. The first part consisted of readiness-to-proceed (RTP) reviews for the Hanford Management and Integration (M&I) Contractor, the U.S. Department of Energy (DOE) itself, and the DOE Office of Radiological, Nuclear, and Process Safety for TWRS Privatization (Regulatory Unit); and a review of the "Record of Decision for the Tank Waste Remediation System" (62 FR 8693). Those RTP assessments are discussed in Section A.1.

The second part addressed selection of the best arrangement with private contractor(s) for Part B. Assessments were made of the contractors’ Part A deliverables against each of the three, contract-specified decision criteria:

• Ability to meet Phase I, Part B contract requirements;
• Ability to perform Part B services for a reasonable price; and
• Ability to provide best value to the government.

Using these prime criteria, the decision methodology for contractor selection was constructed to make several key decisions answering the following questions:

• Should zero, one, or two contractors be selected?
• Should high-level waste (HLW) processing be included or not, and with which contractor?
• If one contractor is selected, should it be BNFL Inc. (BNFL) or Lockheed Martin Advanced Environmental Systems (LMAES)?
• Is this cost-effective for the government versus other options (e.g., the M&I, cost-reimbursement approach)?

The decision process was capable of handling the situation where either one or both contractors passed the initial Part B viability screen. However, DOE determined in the process of evaluating LMAES’ Part A deliverables that there was too much risk associated with its technical approach, and LMAES was eliminated from further consideration. This outcome has the result of directly answering some of these fundamental questions. The rest of the ATP process is one of ensuring price reasonableness in the BNFL bid and, through contract negotiation, ensuring that the best deal for the government was achieved with BNFL. The contractor selection process is described further in Section A.2.

A.1 Readiness-to-Proceed (RTP) Assessments

The RTP reviews were performed to ensure that all organizations required to support the Part B contractor would be able to perform their functions.

• Hanford M&I Contractor Readiness-to-Proceed. This RTP assessment consisted of the review of the Hanford M&I Contractor’s TWRS Phase I plans to carry out feed delivery, immobilized product and secondary waste acceptance, and infrastructure improvements in support of the TWRS Phase I project. In its role of carrying out the non-privatized portions of the TWRS scope, the Hanford M&I Contractor will need to provide all services necessary to ensure the privatized contractor can be successful.
• DOE Readiness-to-Proceed. Another crucial element for the success of TWRS Part B is to ensure that DOE be prepared to manage BNFL and the Hanford M&I Contractor during Part B. Since the TWRS Phase I project is a different contract arrangement than DOE has negotiated in the past, DOE has to manage an integrated TWRS that includes both the Hanford M&I and BNFL contracts.
• DOE Regulatory Unit Readiness-to-Proceed. The Regulatory Unit is the independent regulatory body that will oversee the nuclear, radiological, and process safety of BNFL in TWRS Phase I, Part B. It has been crucial to the ATP decision that the Regulatory Unit be prepared to carry out its regulatory duties and have those plans clearly understood by the privatized contractor. The Regulatory Unit RTP consisted of an assisted self-assessment carried out in February 1998 and an independent review, completed in April 1998, by the DOE Office of Environmental Safety and Health.
• Environmental Impact Statement—Record of Decision Review. The TWRS Environmental Impact Statement (DOE 1996) Record of Decision (62 FR 8693) committed DOE to complete a review of the TWRS Phase I project prior to initiating Part B. The review was designed to ensure that DOE did not proceed with Part B unless the governing strategy for TWRS was adequately covered by the Environmental Impact Statement and Record of Decision pursuant to the National Environmental Policy Act.

Figure A-1. Authorization-To-Proceed Decision Process (17 Kb)

A.2 Contractor Selection Process

The selection process, which was based on the contractor’s ability to: (1) meet Part B requirements, (2) provide Part B services for a reasonable price, and (3) provide best value to the government, is discussed in the following sections.

A.2.1 Ability to Meet Part B Requirements

Based on a review of each contractor’s deliverables, two determinations were made:

• Whether the contractor sufficiently met the Part A requirements to qualify for payment for Part A; and
• Whether the contractor is able to meet Part B contract requirements.

DOE evaluated the contractor’s ability to meet Part B contract requirements based on the following questions.

• Does the contractor have a viable technical, regulatory, and business approach?
• Has the contractor provided sufficient information to assess its ability to implement its processes at full scale?
• Are the skills and experience reflected in the contractor’s management and technical teams adequate to demonstrate a reasonable certainty that the contractor’s project will be successful?

This evaluation was conducted by a team of DOE, external experts, and national laboratory staff. The evaluation was based on a set of 13 evaluation plans—one for each of 12 deliverables, plus one for overall viability. As described in Appendix B, two outside reviews also were conducted.

A.2.1.1 Viability Evaluation Results for BNFL

Based on its evaluation of Part A deliverables, DOE determined that the BNFL team demonstrated that its proposed technical and regulatory approaches were viable. Its business and financial approach required negotiations to achieve acceptable conditions and better value for the government. There was a strong indication that BNFL would be successful in the Phase I, Part B work. DOE also judged that BNFL’s proposed technologies and conceptual facility design were robust and mature, based on the demonstrated use in operating plants in the United States, the United Kingdom, Japan, and France (see Table 4-1).

A.2.1.2 Viability Evaluation Results for LMAES

Based on an analogous evaluation, DOE determined that the deliverables provided by LMAES set forth an approach with an unacceptably high technical risk in attaining DOE’s cleanup goals. LMAES’ approach proposed numerous technologies that would require research and development. The approach was judged by DOE (and two groups of external experts who assisted DOE with its review of the proposed waste treatment technology of both contractors) to be too risky and require substantial, additional development work. In DOE’s judgment, the LMAES facility configuration and technical approach would likely undergo substantial change prior to the time that a waste treatment facility would be operational. LMAES Part A deliverables placed the risk associated with these changes on DOE through cost-reimbursement contracting and would not provide a fixed price for treatment services until at least one year after the start of hot operations. The LMAES approach was deemed not viable for Part B of the TWRS Phase I project.

A.2.2 Price-Reasonableness Determination

Price-reasonableness was determined by considering the following questions.

• How do the proposed prices compare with the "should cost" (government fair cost) estimates?
• How do the proposed prices compare with a conventional Management and Operating approach for a comparable plant capacity and useful life?
• Does the price of waste processed per unit of measure represent a good value compared with other applicable estimates of the price for this work?
• Has a sufficient degree of competition been maintained during the pricing process?

This assessment was only carried out for BNFL.

A.2.2.1 Best Value to the Government

The objective of the best-value assessment was to identify contract terms that represent the best deal for the American taxpayer in carrying out TWRS Phase I work scope and to compare the negotiated arrangement with other programmatic alternatives.

The sub-criteria for evaluating best value to the government were constructed to mirror the fundamental objectives of the TWRS Phase I project. These sub-criteria, and further levels of detail, were used both to evaluate contractor-proposed enhancements and to make the final best value determination about which contract(s) should be the basis for proceeding with Part B. These best-value sub-criteria were:

• Minimize programmatic risk for Phase I;
• Minimize environment, safety, and health risk;
• Position DOE to complete the balance of the TWRS mission after Phase I; and
• Minimize costs.

These sub-criteria were developed to encompass values and concerns expressed by Hanford regulators, affected Tribal Nations, and stakeholders. They also recognized that the quality of the contractors’ project plans and the experience of the contractors’ management teams are key factors in DOE’s assessment of programmatic risk for a successful TWRS outcome. Accordingly, these aspects of the contractors’ proposals have been included as an input during the best-value assessment.

The best-value assessment included two elements:

• Determination of the best path forward for Part B (privatization best value) based on
  • Assessment of possible enhancements and changes to contractor proposals;
  • Procurement best-value assessment, comparing contractors for similar work scope;
  • Privatization deployment best-value assessment, considering one versus two contractors and the inclusion of high-level waste vitrification services; and
• Programmatic best-value determination comparing the contract negotiated with BNFL with other programmatic alternatives.

The best-value assessment was based on a decision framework previously used in major DOE and Department of Defense decisions and adapted for use on the TWRS Phase I project. The Department of Defense Cost and Operational Effectiveness Analysis decision framework was adopted to ensure that the basis for the ATP decisions could be clearly articulated and documented. The best-value decision analysis was based on the criteria defined earlier, with further definition, including specific metrics for each sub-criterion.

To ensure that the best approach to proceed with tank waste processing and disposal was selected, other alternatives were defined and compared to proceeding with BNFL. This comparison was part of an iterative process to evaluate specific tank waste processing and disposal approaches.

The best-value assessment of the BNFL enhanced proposal, which included an initial design period, referred to as Part B-1 in the contract, determined that structuring Part B with this initial period and subsequent decision point was of benefit to DOE.

A broad range of alternatives with differing levels of detail was considered as part of the ATP decision process. The range included:

• Having BNFL proceed with scope other than combined HLW and low-activity waste (LAW) processing services;
• Considering alternatives to privatization (e.g., government-owned, contractor-operated) for accomplishing the TWRS mission; and
• Considering alternatives to the current TWRS strategy.

This assessment and comparison, as summarized below, confirmed that proceeding with BNFL is in the government’s best interest.

DOE also evaluated the alternative of proceeding with BNFL as the contractor for LAW processing services only. This alternative was considered to be inferior to the decision to proceed with BNFL providing both LAW and HLW immobilization services.

Combined HLW and LAW processing services were preferred for several reasons.

• DOE cost and management of intermediate waste product are avoided.
• HLW processing service in Phase I provides a technical basis for timely completion of the TWRS mission.
• There is a sufficient technical basis for the HLW processing.
• Including HLW services does not substantially raise the Phase I cost, and does not impose significant additional requirements on the Hanford Site infrastructure, while treating the highest risk waste.
• Including the HLW processing service permits treating some of the highest risk tanks early in Phase I.

Three non-privatization alternatives were developed in the ATP decision process prior to receipt of contractor deliverables. The purpose of these alternatives was to provide benchmarks against which implementing the Part B decision could be compared. The three alternatives developed were:

• Delayed implementation of the TWRS strategy pending available funding;
• Single-phased, full-scale, government-owned, contractor-operated facility; and
• Government-owned, contractor-operated facility executing the Phase I work scope.

DOE wanted to ensure that a comprehensive range of alternatives was considered in making its decision whether to authorize BNFL to proceed with Part B. Each of these alternatives had major disadvantages including long delays in initiation of waste processing and disposal, incurring delay in retrieval of single-shell tanks or building of new double-shell tanks, higher cost, inability to support feed schedule, and/or higher programmatic risk. This led to a consideration of additional alternatives to: (1) determine if any alternatives with lower near-term costs were plausible and attractive to DOE; and (2) have some fallback position should negotiations with BNFL not produce an acceptable agreement.

An analysis of these alternatives was performed. The conclusions are discussed below.

• None of these alternatives are clearly superior to authorizing BNFL to proceed into the next contract phase.
• A few alternatives reduce near-term costs by performing the current work scope in a different sequence or at a slower pace. However, all of these alternatives require a redesign phase and would delay startup. All would be strongly opposed by regulators and stakeholders. These alternatives are also less cost effective from a life cycle perspective.
• Other alternatives would reduce near-term cost by performing very different scopes of work but would be inconsistent with the Record of Decision for TWRS (62 FR 8693) and the Hanford Federal Facility Agreement and Consent Order (also known as the Tri-Party Agreement). Extensive delays would result.

Each alternative was assessed for schedule impact, near-term cost, life cycle cost, environmental safety and health impacts, TWRS system impacts, compliance, and stakeholder support.

A.3 References

62 FR 8693, February 26, 1997, "Record of Decision for the Tank Waste Remediation System," Federal Register.

DoD, 1991, Cost and Operational Effectiveness Analysis, DOD 5000.2-M, Part 8, U.S. Department of Defense, Washington, D.C.

DOE, 1996, Tank Waste Remediation System, Hanford Site, Richland, Washington, Final Environmental Impact Statement, DOE/EIS-0189, U.S. Department of Energy and Washington State Department of Ecology, Richland, Washington.

Hanford Federal Facility Agreement and Consent Order, 89-10, as amended, Washington State Department of Ecology, Olympia, Washington; U.S. Environmental Protection Agency, Seattle, Washington; and U.S. Department of Energy, Richland, Washington.

National Environmental Policy Act of 1969, Public Law 91-190, 42 United States Code 4321 et seq.

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