U.S. Auditor Faults Agency for Nuclear-Project Cost Estimates

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Construction of the U.S. National Nuclear Security Administration's Mixed Oxide Fuel Fabrication Facility is seen in this 2010 aerial photograph. Congressional auditors on Thursday faulted the Energy Department agency for not having a good handle on why costs have risen so much for the South Carolina project.
National Journal
Rachel Oswald
Feb. 20, 2014, 9:30 a.m.

A U.S. Con­gress watch­dog is fault­ing the En­ergy De­part­ment for not hav­ing a clear idea why costs have ris­en so much on a key non­pro­lif­er­a­tion pro­gram.

The de­part­ment’s semi­autonom­ous Na­tion­al Nuc­le­ar Se­cur­ity Ad­min­is­tra­tion fore­casts a roughly $3 bil­lion in­crease in the cost to its ef­forts to dis­pose of sur­plus weapons-grade plutoni­um by trans­form­ing it in­to atom­ic re­act­or fuel known as mixed ox­ide. Con­gress’ Gov­ern­ment Ac­count­ab­il­ity Of­fice in a new re­port re­leased on Thursday said the agency had erred by not ana­lyz­ing the “root causes” be­hind the cost in­crease.

The con­gres­sion­al aud­it­ors noted the nuc­le­ar weapons agency his­tor­ic­ally has “dif­fi­culty in com­plet­ing pro­jects with­in cost and sched­ule,” which has con­trib­uted to a num­ber of these ini­ti­at­ives fa­cing “high risk of fraud, waste, ab­use, and mis­man­age­ment.”

The Mixed Ox­ide Fuel Fab­ric­a­tion Fa­cil­ity un­der con­struc­tion at the Sa­van­nah River Site in South Car­o­lina has seen its pro­jec­ted price tag rise from $4.9 bil­lion to $7.7 bil­lion. Sev­er­al gov­ern­ment of­fi­cials and in­dustry in­siders re­cently told the Cen­ter for Pub­lic In­teg­rity the fi­nal cost of build­ing and op­er­at­ing the plant could reach as high as $30 bil­lion. That pro­jec­ted ex­pense re­portedly has led the Obama ad­min­is­tra­tion to con­sider look­ing for an­oth­er op­tion for dis­pos­ing of the 34 tons of plutoni­um that the MOX fa­cil­ity was in­ten­ded to handle.

One ma­jor reas­on for the rising pro­ject costs is that the En­ergy De­part­ment in 2007 ap­proved cost and sched­ule es­tim­ates when the over­all designs were only 58 per­cent com­plete, ac­cord­ing to the GAO re­port. Be­cause of this early move, agency of­fi­cials are now re­port­ing that the ex­pense of key com­pon­ents for the plant are on av­er­age 60 per­cent high­er than was earli­er es­tim­ated.

The re­port con­cluded there was not a clear un­der­stand­ing as to why the En­ergy De­part­ment ap­proved the cost es­tim­ates when the design work was far from be­ing com­plete. Hav­ing that know­ledge could help NNSA of­fi­cials in the fu­ture avoid­ing re­peat­ing the mis­takes made with the mixed-ox­ide pro­gram, the aud­it­ors said.

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