Excerpts from 12/22/10 correspondence with Secretary Chu's CMRR-NF/UPF Review Panel

...I thought you might be interested in this little "value engineering" check on the current direction of CMRR-NF.  If we assume HazCat II space is "apples," and HazCat III/IV space is "oranges," I look at the value NNSA is getting in terms of "apples" + "oranges," i.e. "fruit."  As you can see NNSA downscoped this project considerably as far as the useful space is concerned, even as the cost has gone through the roof.  I think the percentage increase in estimated cost is much greater than any large project in NNSA's history to date.  The "balloon factor" is larger than any of the large DOE projects examined in GAO's 2007 review (pdf).

Most of my assumptions are shown.  All the data is from congressional budget requests and one (2001) Ten Year Site Plan.  Slightly different results can be obtained under different assumptions regarding the limited data set, but the overall result doesn't change appreciably or in qualitative terms.

I got the (approximate) 38,500 sq. ft. of useful space from NNSA project managers last year and I assume it hasn't changed.  Initially, CMRR-NF was supposed to have 60% of its 200,000 gross sq. ft. of interior building area devoted to programmatic purposes.  Now it is about 9.5% (of 406,000 gross sq. ft.).  Overall concrete requirements have increased since 2003 by a factor of 116.

I see a decline in estimated value (i.e. product obtained/dollar spent) at CMRR-NF by about a factor of 45, or more if one assumes the 2003 square footage of useful area was what LANL and NNSA had in mind earlier, in 2001 and 2002.

Needless to say there has also been an erosion in compliance with DOE Order 413.3, which was put in place after reviews by GAO and the National Research Council to prevent this kind of outcome.  We are still 2-3 years from a baseline on this project, as I understand it, even though design is about half completed.

To me, the direction toward which this all trends is that somebody, whether this committee or some other, should examine alternatives.  Unfortunately, NNSA has not developed any yet.

Yesterday I spoke with a former member of the NRC panel which worked to improve DOE project management from 1999 to 2003.  This team, the members of which worked on a voluntary basis, criss-crossed the country and spoke to about 200 DOE people and a number of outside experts over these years, and produced a number of reports.  Yesterday he felt that little or nothing had improved at DOE as a result of their labors.  As many people told the team, the cost of DOE projects was set from the top down, i.e. set politically, not managerially as in the private sector.  Project scope, as the team wrote in their 1999 report, was treated by DOE as a contingency, i.e. was set (up or down) by DOE's perception of what the market would bear (NRC, 1999, electronic page 39).  It's a sorry picture, and I could tell it was depressing to him.  It would be (and is) to me too.  The CMRR-NF project breaks most of DOE's most important project management rules, and the cost and schedule fallout is evident.  It is incredible to me that it is being allowed to proceed under these conditions, with DOE's project management rules in tatters beneath.

A kind of monomaniacal blindness seems to have arisen regarding CMRR-NF wherein no alternatives to the project are deemed possible, even though project realities have changed so greatly.  No price, it appears lately, is too great to pay, although exactly what capabilities would be bought is not fully apparent.  The scrutiny once provided by Congress and even by OMB for the first few months of this Administration, is temporarily absent.  GAO is silent.  The building has become a token of larger meanings, a symbol of nuclear preparedness rather than a rational tool, and God knows what else.  It is beginning to feel a bit like the pursuit of the White Whale in Moby Dick.

This morning I worked up the table below, using a variety of sources and modeling the 2005 CMRR-NF cost at 2/3 of the stated CMR cost overall.  The inflator used is the CPI-U; costs are Total Project Costs (TPCs).

Taking the long view, it is possible that these high capitol costs, which are more than an order of magnitude greater than during the Cold War in constant dollars, and which will be augmented by equally-increased operating costs relative to the CMR facility today (which has an extremely low maintenance cost, especially since it is being inappropriately run to failure or replacement, whichever comes first), will prove to be incompatible with effective maintenance of a nuclear deterrent.  That is the view of some with whom I have spoken.  Said differently, the CMRR-NF behemoth may simply be too inelegant to be practical.  A surprising number of people believe it is too ambitious to be successfully built.  On balance I think NNSA might manage to get it built, but I am not sanguine about its future operation, or about the quality of science that would surround it.

You have received my little Chinese menu of CMRR-NF alternatives (The Proposed Chemistry and Metallurgy Research Replacement Nuclear Facility (CMRR-NF): New Realities Call for New Thinking, pdf, Dec 10, 2010).  Another restaurant would have a different, but overlapping menu.  I have not checked out the competition yet, nor do I know if there is any active.  But I am sure the prices in NNSA's restaurant are too high, so out of line it's a wonder they can stay in business.

I omitted some items on that short menu, such as moving the facility to a nearby location at LANL that did not have the offending unconsolidated ash layer.  I limited myself to 4 pages.

What I do not know well, or know precisely, is what the customer really needs, and how those needs are generated by present and future contingent policies.  The customer's wants are more or less infinite, of course -- bird's nest soup today, then endangered tiger, and on up to unicorn or whatever.  The fact is that at some point in this spectrum of wants -- we don't know for sure what that point is -- the restaurant will go broke, and the customer will starve or lose interest waiting for the gourmet meal.  Clarifying this matter of purpose and need would be helpful.  At present NNSA has kept it as clear as mud.  By failing to clarify project scope, NNSA assures CMRR-NF design is a so-called "wicked problem," in which the evolving solutions redefine the problem to be solved.  More sarcastically, to what extent is CMRR-NF (with the "hotel concept") a $5.8 billion answer looking for a question -- a hotel, looking for lodgers?

We do not know the mission elements needed for the plutonium mission.  No one with money and clearances has studied how these missions line up with the capacities, present and contingent, of existing and planned facilities, or in general what the most elegant and cost-effective solutions might be.  Six billion dollars -- and now CMRR is likely to cost more than that, with RLUOB, CMR D&D, not to mention the security fence -- would buy a lot of remodeling and planning.

I therefore recommend that your panel consider the wisdom of having somebody seriously study this problem prior to NNSA investing further in what may be an overpriced capability of dubious true utility, or worse, a fiasco....