Radioactive waste has been stored in large underground storage tanks at the Hanford Site since 1944. Approximately 56 million gallons of waste containing approximately 240,000 metric tons of processed chemicals and 250 mega-curies of radio nuclides are currently being stored in 177 tanks. These caustic wastes are in the form of liquids, slurries, saltcakes, and sludge. In 1992, the Tank Waste Remediation System (TWRS) Program was established to manage, retrieve, treat, immobilize, and dispose of these wastes in a safe, environmentally sound, and cost-effective manner. The integrated TWRS program was designed to include efforts to resolve a number of safety concerns and technical issues, and to address past leakage from some of the underground storage tanks which has contaminated the vadose zone and, recent reports indicate, could have contributed to contamination of the ground water. Storage in the current tanks is very costly and, as the tanks age, potential for radioactive and chemical release increases, although the short-term risks are low. The TWRS program will substantially decrease the long-term costs and provide long-term protection of public health and safety and the environment, by removing the wastes from the tanks and providing a waste form suitable for long term disposal.

The TWRS pathway for cleanup is formally documented in the Hanford Federal Facility Agreement and Consent Order, commonly known as the Tri-Party Agreement (TPA). Under the TPA, DOE, the U.S. Environmental Protection Agency (EPA), and the Washington State Department of Ecology have agreed to a 30-year timetable for cleanup of the Hanford Site. Key dates related to the privatization found in the TPA are selection of contractor(s) for Phase 1 Part B by July 1998 (TPA-M 60-10), initiate definitive design of HLW pretreatment facility by November 1998 (TPA M 50-04-T01), start construction of HLW pretreatment facility by June 2001 (TPA M-50-04-T01), start hot operations of Phase 1 Pretreatment and Immobilization Facilities by December 2002 (TPA M-60-12), and completion of Pretreatment and Immobilization of all Hanford low activity waste by December 2024 (TPA M-0-00).

The Hanford Site processed more than 100,000 metric tons (110,000 tons) of uranium and generated several hundred thousand metric tons of wastes. The waste include: high-level wastes (i.e., cesium-137 and strontium-90), low-level wastes, and hazardous waste, which may exhibit dangerous characteristics of ignitability, corrosivity, reactivity, or toxicity. All of the waste is stored at Hanford and is being addressed in the TWRS Program.

The TWRS privatization program is divided into two phases. Phase I is a commercial demonstration effort whose objectives are to: demonstrate the technical and business viability of using privatized facilities to treat Hanford tank waste; define and maintain required levels of nuclear, radiological, and occupational safety; maintain environmental protection and compliance; and substantially reduce life-cycle costs and time required to treat Hanford tank waste. Phase I consists of two parts. Part A is a 20-month period to establish the technical, operational, regulatory, business, and financial elements required by privatized facilities that will provide tank waste treatment services on a fixed-unit-price basis. Based on Part A performance, one or more of the contractors who successfully perform Part A will be authorized to perform waste-treatment services for DOE in Part B. Part B is a period of 10 to 14 years, during which the authorized contractor(s) will finance, design, construct, operate, and deactivate the waste-treatment facilities. During Part B, fixed unit prices will be paid only for completion and acceptance of waste-treatment services meeting contract specifications. If Phase I efforts are successful, DOE plans a second competitive procurement for Phase II activities. Phase II would be the full-scale production phase, and it is currently expected to begin in 2005 (contract award). The current Phase II plan involves two competitively selected fixed-price contractors who will finance, design, construct, operate, and deactivate waste-treatment facilities. The objectives of Phase II include implementing the lessons learned from Phase I, processing all tank waste into forms suitable for final disposal, and meeting or exceeding regulatory performance milestones.

The wastes will be retrieved from the tanks and separated into low activity and high activity fractions, which will be immobilized for safe permanent storage meeting government specification and in accordance with all Federal and State regulations.

The Department’s regulatory approach is to utilize, to the extent possible, established and functioning external regulatory authorities, such as the Nuclear Regulatory Commission and the Occupational Safety and Health Administration. The Department will retain oversight responsibility for radiological and nuclear safety, and certain aspects of environmental compliance.

The contractor shall be responsible for the protection of human health and the environment from radioactive materials, hazardous materials, and dangerous waste contamination, and non-radiological worker safety and health from conventional industrial and occupational hazards.

The FY 1997 appropriation of $170.0 million and the FY 1998 appropriation of $115.0 million are for the purpose of authorizing contractor(s) to proceed with part B of the contract for treatment of 6-13 percent of the Tanks Waste. The contractor(s) will initiate Detailed Design, prepare equipment procurement specifications, identify and order long lead materials and equipment, and establish radiological Nuclear Safety Requirements. These funds also cover the remote possibility of termination of the contract. They will eventually be used to reimburse capital expenditures after services commence. It is anticipated that there will be two primary work scopes accomplished in FY 1999 by TWRS privatization contractor(s): 1)the completion of detailed design; and 2)the ordering of long-lead time material.

The contractor(s) will be required to reach financial closure(obtaining private sector financing for the construction of their facility) prior to start of construction. In order to obtain financing the contractor(s) will have to complete all their design work. Detail design work involves the development of all structural detail drawings, mechanical systems design and detail drawings, electrical design and detail drawings, and all radiological, nuclear and process safety analyses required to support the design work. During the development and completion of the detail drawings, the contractor(s) will identify the long-lead time material, typically those items that require several years to obtain once the order is submitted.

During the development of the detail drawings the contractor(s) will start to order the long-lead time materials required to support the construction of the facility. Structural long-lead time material would include any special structural members (unusual forms or sizes). Mechanical long-lead time materials include the cesium ion exchangers, Hastalloy tanks, Hastalloy piping, Hastalloy fittings, the low activity waste and high level waste melters, and their respective control systems. Special distributive control systems will be ordered downstream to be completed prior to installation.

Fiscal year 1996 funding of $54.0 million from within the Defense Environmental Restoration and Waste Management Appropriation, Waste Management Program, was used to award Phase 1, Part A of the contract, and is expected to be costed in FY 1998.

As shown in section 11, the total project cost for Phase I is $5.144 million. This estimate includes $54.0 million for Part A that was funded in FY 1996 from the Office of Environmental Management Base Program.

Total capital cost during Part B has been estimated to be $1.450 million. In addition, future budget requests for an estimated $2.450 million will be made within the Defense Environmental Restoration and Waste Management Appropriation, for the purpose of making payments to the vendor for the contractually required services. These estimates were prepared before Part A of the contracts was initiated. It is expected that these estimates will change in January to May 1998 after receipt of the Contractor Part A deliverables, contract negotiations, and the completion of the Authorization to Proceed decision process. The estimated capital and expense requirements are expected to change because the contractors have both proposed the use of facilities with a 30-year plant life (which may result in higher capital costs) but which also have lower operating costs. These facilities will be used in Phase I and could be used to execute a significant portion of the Phase II TWRS mission and thus reduce total-life-cycle costs.

In September 1996 DOE awarded contracts to two teams led by the BNFL, Inc. and Lockheed Martin Advanced Environmental Services. The contracts were for the Phase 1, Part A of this project. The contractors will demonstrate the technical and business viability of using privatized facilities to treat and immobilize Hanford tank wastes; define and maintain

required levels of nuclear, radiological and occupational safety; maintain environmental protection and compliance; and reduce life-cycle costs and remediation time. The Department will then select one or both of the contractors to proceed with Phase I, Part B. In Part B, the two contractor(s) will finance, design, construct, operate, and deactivate their own facilities during Phase I, Part B of the privatization. Site infrastructure support to include Tank Retrieval systems, roads, utilities, etc. will be provided by the government utilizing the existing Management and Integration contractor on site. Phase I is expected to last from 12 to 16 years and process between 6 and 13 percent of the tank waste.

The contractor must finance the project; design the equipment and facility; apply for and receive required permits and licenses; construct the facility and bring it on-line; operate the facility to treat waste; and deactivate the facility. The contractor can recover the resources it has invested only through the delivery of acceptable services paid for by DOE on a fixed-unit-price basis. The underlying intent is to transfer the primary share of the financial, performance, and operational responsibility for the treatment effort from the Government to the contractor.

* Represents payment to competing vendors for demonstration under Phase 1a.

The privatization approach of $3,954 million ($1,450 million capital and $2,450 million operating) is expected to lead to cost savings/avoidance of $1,496.0 million (27 percent) compared to the cost estimate for the traditional M&O approach of $5,450,000,000. The estimated funding requirements for the privatization contractors to do the work are based on privatization bids, with assumptions for post negotiation adjustments. The estimate also excludes M&O support costs, which is comparable to costs to support the Privatization contractors. These estimates were developed by DOE in November 1996.