Report to Congress Treatment & Immobilization of Hanford Radioactive Tank Waste

EXECUTIVE SUMMARY

Summary

This report to Congress on the Tank Waste Remediation System (TWRS) Phase I privatization project describes the U.S. Department of Energy’s (DOE’s) plan for taking the next steps to assure treatment of Hanford tank waste. The report also fulfills the notification requirements of Section 3132 of the National Defense Authorization Act for Fiscal Year 1998, initiating the 30-day waiting period for the Secretary to enter into a defense environmental management privatization contract.

DOE has decided to authorize one contractor team led by BNFL, Inc. to proceed to the next phase of the TWRS privatization project. The next phase is a 24-month design period that will result in sufficient engineering and financial maturity to establish fixed-unit prices and to finalize project financing terms. At the conclusion of the design phase, DOE will make a decision whether to proceed with BNFL into a construction and operations phase. If authorized to proceed to the construction and operations phase, BNFL would provide both high-level and low-activity waste treatment and immobilization services. During the 10-year minimum-order-quantity period, the BNFL facility is expected to process approximately 10% of the Hanford tank waste by mass and 20% to 25% by radioactivity.

The Challenge

Approximately 54 million gallons of highly radioactive wastes are stored in 177 underground tanks, including 149 older single-shell tanks, at the Hanford Site in Washington State. That waste, which was derived from production of plutonium for the nation’s nuclear defense program, has been accumulating at Hanford since 1944. The waste poses a serious safety concern to the public and to the environment. Since most of the single-shell tanks have exceeded their design life, that risk is growing. Sixty-seven of the single-shell tanks are known to have leaked, and several additional tanks are being investigated for potential leaks. Nearly a million gallons of the tank waste has spilled into the soil of the vadose zone below the tanks since the first leak occurred. Recent information has indicated that tank waste radionuclides have moved through the vadose zone and now have reached the groundwater that flows under the Hanford Site and connects with the Columbia River.

DOE is taking active measures to reduce the chance of additional tank leaks. However, it is not possible to predict when the next tank will leak, and with passage of time, even the newer, safer double-shell tanks are approaching the end of their design lives. Removal of the waste from the tanks, treatment, and immobilization as an inert waste form will constitute a lasting solution to the problem. DOE, the U.S. Environmental Protection Agency, and the Washington State Department of Ecology have entered into an enforceable compliance agreement setting forth milestones for cleanup of the tank waste.  DOE, State regulatory agencies, and stakeholders view the tank waste cleanup as one of their top priorities.

Tank Waste Remediation System Program

In view of the importance of the Hanford tank waste issue, DOE established the TWRS program in 1992 to ensure that the tank wastes would be stored, treated, and immobilized in a safe, environmentally sound, and cost-effective manner. In 1994, DOE embarked on a privatization demonstration strategy to purchase waste processing services from best-in-class companies instead of building its own facilities. One goal of that demonstration strategy was to make greater use of the technologies, demonstrated efficiencies, and management discipline of private industry to provide effective solutions to the tank waste challenge. However, at the same time, it was determined that several major TWRS functions (e.g., waste retrieval, and waste characterization) were not appropriate for fixed-price contracting. These functions are being carried out by the Management and Integrating contractor for the Hanford Site, which is currently Fluor Daniel Hanford.

In September 1996, DOE entered into contracts with two contractor teams—one led by BNFL, Inc. (BNFL) and another led by Lockheed Martin Advanced Environmental Systems (LMAES)—for Phase I of the TWRS privatization project. At the time of contract award, the contracts for TWRS Phase I were structured into two parts, a 20-month Part A, ending in mid-1998 and an optional Part B, planned for approximately 10 to 14 years. The purpose of Part A was to evaluate the technical, operational, regulatory, business, and financial elements required by privatized facilities that would provide treatment and immobilization services on a fixed-unit-price basis. Under the original TWRS Phase I contracts, Part B was a period, scheduled to begin in mid-1998, in which the authorized contractor(s) would fully finance, design, construct, operate, and deactivate waste treatment plants on a fixed-price basis.

Based on a detailed review of the work products prepared by both contractors (as required by Part A of the contract), DOE has decided to restructure Part B of the contract and to authorize only one contractor, BNFL, to proceed to the design phase of Phase I. DOE has concluded that the BNFL proposal contained a viable conceptual facility design with robust technologies that have been effectively demonstrated at other sites. DOE concluded that BNFL would be able to meet contractual requirements for design, construction, and operations in the balance of Phase I.

In comparison, DOE determined that the Part A work products provided by LMAES set forth an approach with an unacceptably high technical risk in attaining DOE’s cleanup goals. The LMAES conceptual facility design was deemed to be unrealistic without additional development, and its proposed technologies, while novel in some cases, were largely unproven. The LMAES proposal did not provide DOE with evidence to conclude with a sufficient level of confidence that LMAES would be able to meet the contract requirements for the balance of Phase I. As a result, DOE decided not to authorize LMAES to proceed to the design phase.

In light of the importance and sensitivity of the authorization-to-proceed decisions for BNFL and LMAES, DOE used nearly 100 independent experts to participate in the decision-making process in advisory, contributor, and review capacities. DOE expects to continue to use an independent review process to assist in program decisions as Part B of the contract progresses.

Scope and Structure of the BNFL Contract

The contract with BNFL reflects an evolution of the original TWRS privatization approach. The original approach envisioned that the Department would make a final, multi-billion dollar decision whether to proceed with the TWRS Phase I project at the end of the 20-month Part A developmental period with completion of conceptual design. The revised approach will allow DOE to move forward on design without delay, but defers a final decision until the project is further refined with respect to its design and technical approach, regulatory requirements, and financial and incentive structure. This approach incorporates the changes necessary for the downselect to a single performer and the division of Part B of the contract into two parts. Specific contract provisions are included to: 1) develop the necessary technical, operational, regulatory, and business elements to reduce uncertainties and provide performance assurance, and 2) refine the contract management processes required for the life of the contract early during the design phase.

During the design phase, BNFL will take its current enhanced conceptual design to one in which final design approaches have been selected for all major process and facility systems (approximately 30% design). This more detailed design and improved understanding of regulatory requirements are expected to enable BNFL to obtain project financing and to propose fixed-unit prices for waste processing services. Based on the current scope of work, the estimated cost of the design phase would be $350 million.

The current BNFL target price for the 10-year minimum-order quantity of treated waste under the contract is $6.9 billion (FY1997 dollars). This price is significantly higher than the original DOE estimates for Phase I. This is, in part, because the hazards presented by the operations to be performed under the contract necessitated more robust facilities for processing and confinement of the waste. These facilities will have a 30-year design life rather than the original concept of a 5- to 9-year demonstration facility. As a by-product of the longer design life, the plant has the potential to treat waste for a much longer period, can treat waste with a broader range of composition, and could treat more than half of the tank waste (by mass) and approximately 95% of the long-lived radionuclides with a limited additional investment.

Although the contract developed represents a positive business arrangement for the Department, there are key implementation steps which must be taken in the early stages of the contract to assure project success. DOE will review the project throughout the design phase to ensure that downward pressure is maintained on the target prices and that necessary progress is maintained by BNFL in developing its technical and safety design, and in securing necessary financing and permits. This will include an important review after six months to reach agreement with BNFL on the terms and methodology that will be used to establish the fixed-unit prices submitted at the end of the design phase.

At the end of the 24-month design phase, DOE will decide whether to proceed with the subsequent construction and operations portion of Phase I or to pursue one of several other approaches to complete Phase I. BNFL’s authorization to proceed will depend on DOE receiving acceptable fixed-unit prices, acceptance for review of their design for nuclear and chemical process safety, a substantial equity commitment by BNFL, and other significant financing arranged by BNFL. A key element of this financing will be BNFL equity, which represents BNFL’s investment in the success of the project.

In combination with BNFL’s activities during the design phase, DOE will be carrying out a number of other activities to ensure that an optimum contract results at the end of that phase. Those activities will include value engineering studies to refine technical specifications for the most cost-effective waste processing approach, and defining the optimum financing approach with BNFL to be used in the construction and operations phase.

If BNFL is authorized to proceed beyond the design phase, it will move forward to the completion of the design, construction, startup, testing, and operation of the facility to provide waste treatment services at the fixed-unit prices established at the end of the design phase. Under the contract negotiated with BNFL, DOE currently forecasts that waste treatment will begin in 2005 to 2006 and will continue for at least 10 years. During that period, DOE expects the contractor to immobilize approximately 10% of Hanford’s waste by mass. That waste processing will include both high-level and low-activity waste treatment and immobilization. The waste processed during operations will be retrieved from 11 tanks and will free up valuable double-shell tank space to enable transfer of waste from high-risk single-shell tanks. The waste to be processed constitutes between 20% and 25% of the total radioactivity in the Hanford tanks and includes some of the highest safety-risk tanks at the site. BNFL’s facility design provides for the ability to expand the capacity of the plant at a later date. This could allow a significant amount of the waste currently planned for TWRS Phase II to be processed in the expanded facility.

DOE also recognizes that the successful execution of the TWRS Phase I project requires effective management by the Department. The approach to managing this contract involves a less directive role than DOE normally has in a cost-reimbursement contract to take advantage of the incentives and efficiencies of private industry. To carry out this role effectively, the DOE has developed, or is developing, a number of important management tools, including a detailed project management and integration system. Work also is underway to assure that staffing needs are met in a timely manner by a dedicated, specialized team. The management plan includes extensive input from external reviewers, including participants with broad experience in fixed-price contracting with other federal agencies, and the plan takes into account key lessons learned during Part A of TWRS, as well as significant lessons from other recent projects in the DOE complex.