Report to Congress Treatment & Immobilization of Hanford Radioactive Tank Waste

4.0 The Decision to Proceed

DOE’s review of the contractor deliverables for Part A led to the following decisions.

• The LMAES proposal was judged to be non-viable because the technical approach had an unacceptably high technical risk in attaining DOE’s cleanup goals. DOE did not extend the LMAES contract, which expired on May 25, 1998
• BNFL’s proposal was judged viable because the technical approach was sound and the regulatory approach was reasonable. The business and financial terms were not acceptable as originally proposed and were addressed in subsequent negotiations.
• DOE negotiated with BNFL to seek services for both LAW and HLW immobilization. The technical scope of work was generally consistent with an "enhanced proposal" offered by BNFL.

This section summarizes the distinct decisions that support DOE’s authorization to proceed with Part B of the TWRS Phase I project. First, the contractors’ January 1998 proposals are summarized along with the changes in the original 1996 contracts that were proposed and selected for further evaluation. Next, the evaluation and selection of the BNFL proposal is described. Then, the decision to include HLW services as well as LAW services is addressed. The details of the final negotiated agreement with BNFL are provided in Section 5.

To ensure that the path forward for treatment and immobilization of tank waste was the best possible, DOE developed and implemented a systematic decision process to evaluate contractor deliverables. (See Appendix A for a detailed description of the decision process.) This process focused on the three criteria defined in the original RFP:

• Meet Phase I, Part B contract requirements;
• Perform Part B services for a reasonable price; and
• Provide best value to the government.

In addition, the decision process included a determination of the readiness-to-proceed of key supporting organizations (i.e., DOE-RL, the TWRS DOE Regulatory Unit, and the Hanford M&I Contractor) and whether the impact of the contractor approaches remained bounded by the TWRS EIS under the National Environmental Policy Act. Review teams, including numerous experts from private industry, academia, national laboratories, and DOE contractors, also reviewed the basis for the decision and the decision itself (see Appendix B). Individuals with specific expertise in nuclear waste management, nuclear engineering, nuclear safety, project finance, cost estimating, complex construction management, privatization contracting, glass and vitrification technology, chemical and process engineering, radiochemical process design, decision modeling, economics and public policy, and systems management were included on the review teams. These reviews examined the decision at multiple levels of detail (e.g., from overall decision to specific details of readiness-to-proceed assessments and specific financial modeling).

4.1 Description of Contractor Approaches

The following sections describe the contractors’ proposals contained in their January 1998 Part A deliverables. In preparing the Part A submittals, the contractors were encouraged to propose enhancements to the contract that they believed would provide a better overall value to the government. BNFL proposed a series of enhancements as an alternate proposal, as described below in Section 4.1.2. LMAES did not propose technical enhancements to the contract. Instead, LMAES proposed an "alternative pricing approach" that would use a cost-reimbursement contract for much of the proposed work.

4.1.1 LMAES’ Approach

LMAES proposed an approach with several innovative, but untested technologies. Those technologies and their previous applications are shown in Table 4-1. The LMAES technical approach proposed to use a liquid-fed, high-temperature, ceramic melter for LAW immobilization; cold crucible melter for HLW immobilization; and ion-exchange, ozonation, and electrochemical processing for radionuclide removal. LMAES also proposed use of a contact maintenance approach for its LAW vitrification process. Contact maintenance can reduce facility costs (because of reduced shielding requirements), but would require additional separation processes to limit radiation exposure to workers. The additional separation processes proposed by LMAES were generally unproven for application with Hanford waste.

The LMAES business approach included numerous companies providing basic services to a Limited Liability Corporation. No member, including the Project Manager, LMAES, would have a controlling vote. The Project Manager would not be liable for the actions of first-tier subcontractors. The Limited Liability Corporation would have an executive management council comprised of Lockheed Martin Corporation (chair), Fluor Daniel Inc., COGEMA, and AEA Technology. LMAES proposed to provide the project management and systems integration elements as a subcontractor to the Limited Liability Corporation.

LMAES divided the work into 13 job lots and proposed to conduct work on a fixed-price basis for only three of those job lots. The remaining work would be performed on a cost-reimbursement basis. For example, under the LMAES proposal, fixed-unit prices for treated waste would not be set until at least one year after the hot start of the facility. LMAES proposed to recover project costs for design, construction, and startup whether or not their facility successfully processed waste.

4.1.2 BNFL’s Approach

BNFL proposed mature technologies for treatment and vitrification of the wastes, including use of a liquid-fed, low-temperature, ceramic melter based on the same technology used for HLW vitrification at the West Valley Demonstration Project in New York and the Defense Waste Processing Facility at the Savannah River Site in South Carolina. The proposed pretreatment technologies, including ion exchange, precipitation, and isotopic dilution, also have been applied at other facilities in the United Kingdom, Belgium, France, and Japan. Table 4-1 shows BNFL’S proposed technologies for key treatment functions and their previous applications.

The BNFL team, as described in its Part A deliverables, is composed of BNFL Inc., BNFL Engineering Ltd., Bechtel National Inc. (Bechtel), GTS Duratek, and Science Applications International Corporation (SAIC). BNFL will be the prime contractor and majority owner of the special purpose corporation proposed for Part B. In addition, BNFL will be responsible for project management and integration, regulatory and nuclear safety management, and operations management.

BNFL submitted a proposal incorporating fixed-unit prices and also prepared a series of enhancements as an alternate proposal. The separate elements of BNFL’s alternate proposal along with a summary of their merits are described below.

• Design Phase. BNFL indicated that a design phase was needed to achieve an adequate basis for setting reasonable fixed prices. Establishing fixed prices earlier would result in substantially higher prices because of the risk involved. The design phase was needed to obtain private financing and BNFL equity commitment. This phase does not represent a delay in the project; rather it delays the point at which fixed-unit prices are set until the end of the design phase. DOE determined that waiting to set fixed prices until completion of the design phase would substantially lower prices.
• Capacity Expansion/Extension. BNFL proposed several features in its design that would support future capacity expansion and/or extension of operations. Those features would potentially allow the facility to process a large percentage of the Hanford waste over the useful life of the facility. BNFL’s pretreatment facilities were sized to accommodate a capacity increase of 100% at little, if any, additional cost. The HLW vitrification facility was designed with sufficient space for two melters. Only one melter was required for the minimum-order quantity specified in the BNFL contract. A second, larger melter could be added to increase the initial Phase I capacity (by greater than a factor of four). The LAW vitrification facility was designed with the connections and flexibility in common support systems to add a second LAW facility with capacity similar to that of the Phase I facility.

BNFL estimates that those capacity expansions would cost an additional $800 million in construction funds (in FY1997 values) and start expansion of the facility around 2011 to be completed in time for extended processing. If implemented, BNFL contends the expanded facility could enable immobilizing the waste in the 85 highest risk tanks by 2028. The waste in those tanks would account for 55% to 65% (by mass) of the total tank waste and approximately 95% of the long-lived radionuclides that would be mobile in the soil in case of a leak.

• Treatment of Entrained Solids. BNFL proposed to process entrained solids (along with separated strontium and transuranic waste) rather than return them to DOE, on a case-by-case basis. DOE benefits from this enhancement by not having to receive and store this intermediate waste product in a separate DST, thus keeping that DST available for other storage needs. DOE retains the option to receive the entrained solids if it determines it does not want to pay additional costs.
• Sludge Wash in Pretreatment. BNFL proposed to use an ultrafiltration system (part of its base facility design) to separate suspended solids from HLW feed streams. This step would eliminate the need for DOE to provide a less efficient in-tank sludge washing step. The primary benefits to DOE are: (1) elimination of the approximately 924,000 gallons of LAW volume that would be produced by in-tank sludge washing and the need to store this waste (approximately equivalent to the capacity of one DST); (2) reduction of the cost of the Hanford M&I Contractor performing in-tank sludge washing, estimated to be up to approximately $6 million; (3) reduced risk to DOE of meeting feed specifications for certain waste streams; and (4) availability of sludge washing capability for treatment beyond the current contract term.
• Phased Construction and Startup. BNFL indicated that by phasing the construction and startup of pretreatment, HLW vitrification, and LAW vitrification, earlier hot start can be achieved, compared to its base proposal. Compared to BNFL’s base proposal, this enhancement proposed early dates for hot start of pretreatment, hot start for HLW vitrification, and hot start for LAW vitrification. The primary benefits of this enhancement to DOE are: (1) earlier pretreatment reduces DST storage requirements for the initial years of operation; (2) earlier payment reduces private contractor financing costs and prices to DOE; and (3) sequential testing and startup reduce technical risk.
• Extended Base Operating Period. BNFL also proposed an increased minimum-order quantity that would extend the base operating period from 5 years to 10 years. BNFL indicated that this change would lower treatment costs by reducing performance risk (i.e., a longer base operating period would provide more recovery time if problems occur in the first few years of processing).

BNFL’s alternate proposal was evaluated to be superior to its base proposal. Based on the above results, all elements of BNFL’s alternate proposal were accepted for comparison with other possible programmatic approaches and as a basis for negotiations.

4.2 Evaluation of the Contractors’ Approaches

To support its decision to proceed with Part B, DOE conducted a systematic review of all deliverables from Part A. The evaluation of those products led to an initial determination of the viability of each contractor to meet Part B requirements and identified issues to be addressed during negotiations. The review also identified areas of concern for both teams. Therefore, in considering the viability of the two contractors, consideration was given to the features of the proposed approaches that could be refined through negotiations.

The technical viability assessment considered whether proposed technologies are likely to work. The primary consideration in assessing technical viability was the demonstrated maturity of the technologies, process flowsheets, and facility designs. The findings from this review are summarized below.

LMAES was judged to not be viable because the technical approach had an unacceptably high technical risk in attaining the DOE’s cleanup goals. The LMAES contract deliverables did not provide sufficient evidence that the contractor could, with a high degree of confidence, successfully treat Hanford tank waste using the proposed technical approach in a timely manner. The LMAES approach uses numerous technologies that are research and development in nature. The approach was judged by DOE (and a group 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.

This determination by DOE was subjected to two outside reviews: one chartered by DOE-RL, and the second chartered by DOE Headquarters. (The review process and expertise of these reviewers are described in Appendix B.) Those reviews, while finding minor differences with the DOE determination, agreed on the central issue that the LMAES approach had an unacceptably high technical risk.

BNFL was judged viable because the technical approach was sound and the regulatory approach was reasonable. The business and financial terms were not acceptable as proposed and were addressed in subsequent negotiations. In general, the technologies chosen by BNFL for treatment and immobilization are mature, robust, and reliable and have resulted in a conservative process approach. In addition, the development requirements for the selected technologies were understood and identified, and a development program addressing those risks was clearly defined.

The independent review (see Appendix B) led to some refinements in the assessment of BNFL technologies and concurred with the determination that BNFL is viable for Part B. The independent review expressed some concern with the technology for technetium separation and suggested DOE should undertake a development program in parallel to that of BNFL.

DOE entered into negotiations with BNFL for both LAW and HLW treatment services. The Part A contracts provided for DOE to decide to contract for only LAW treatment services or for both LAW and HLW treatment services. DOE evaluated the alternative of including only LAW processing services during Phase I. This evaluation showed that proceeding with combined HLW and LAW processing services was preferred for several reasons.

• High-level services do not substantially raise the total project cost and do not impose significant additional requirements on the Hanford Site infrastructure.

• HLW processing treats some of the highest risk tanks and therefore provides earlier benefit and faster progress.
• Including HLW treatment and immobilization in Phase I will provide a valuable demonstration of the capability needed during Phase II to complete the entire TWRS waste-processing mission.
• The HLW plant will immobilize the waste products from the pretreatment and LAW immobilization process, which means that DOE will avoid additional handling and cost associated with intermediate waste products.
• Sufficient technical basis exists for the HLW processing.

The decision to proceed with BNFL satisfies the fundamental principles originally established for the contracting of privatized TWRS waste processing services.

• Mature and Demonstrated Technology, Process Flowsheets, and Facility Designs. BNFL has proposed a robust facility design based on mature and demonstrated technologies.
• Significant Equity Commitment. BNFL will seek to maximize its equity commitment such that it falls within a range of $200 million to $500 million.
• Contractor Responsible and Accountable for Cost and Technical Performance. BNFL is responsible for proper management of the project and the associated business entity.
• Private Financing. Construction and operations will have significant private financing with the specific approach to be determined during the design phase.
• Responsibility for Environmental Protection and Compliance Assigned to the Contractor. BNFL is responsible for meeting all associated regulatory and environmental requirements of the contract.
• Protection of Worker and General Public Safety/Health. A dedicated nuclear, regulatory, and process safety organization is responsible for oversight of BNFL.
• Government-Purchased Products and Services Meet Performance Specifications. BNFL must meet detailed product specifications in order to be paid for the product.
• Fixed Prices. The fixed prices will be finalized at the end of a design phase.
• Cost Control. DOE will apply requirements for receipt of certified cost and pricing data.
• Life Cycle Cost Reduced Compared to Traditional Contracting Approach. Analyses performed by DOE suggest that there are reduced life cycle costs in pursuing privatization.

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