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NEW Pu STRATEGY ENDORSED BY DOD CAPE, BUT UPF COST QUESTIONS RAISED
DoD Group Paints Jarring Picture for UPF Cost, Which It Says Could Rise As High as $19 Billion

A modular plutonium strategy planned for Los Alamos National Laboratory is expected to be a significantly cheaper alternative to the Chemistry and Metallurgy Research Replacement-Nuclear Facility, but the price tag for the Uranium Processing Facility could be growing substantially, according to a recent analysis by the Department of Defense’s Cost Assessment and Program Evaluation group. The CAPE recently completed an analysis of both projects and has briefed Congress on the results, which would appear to affirm the agency’s plan to meet the nation’s plutonium needs at Los Alamos through smaller facilities but raises questions about the affordability of UPF, which is planned for the Y-12 National Security Complex.

NW&M Monitor has learned that a CAPE business case analysis has suggested the cost of the modular plutonium strategy is less than $2 billion, well below the $3.7 to $5.8 billion price tag for CMRR-NF, but a CAPE estimate for UPF has suggested that the cost could be between $10 and $12 billion, and under a worst case scenario that involves funding constraints and technical issues that would stretch out construction of the project, it could cost up to $19 billion, the CAPE said. The current estimate for the facility tops out at $6.5 billion, and the CAPE estimate is believed to be only for phase one of the project, which involves relocating uranium production capabilities currently at Y-12’s 9212 complex. According to officials with knowledge of the CAPE review, the group analyzed a mixture of funding scenarios and various iterations of the size of the facility to come up with different cost projections.

Under the most optimistic scenario, if the size of the 700,000 square foot building were trimmed back and funding was slightly constrained, the building would still cost approximately $12.5 billion and wouldn’t be completed until 2030, which is well after officials want to move production work out of Y-12’s 9212 complex. The $19 billion cost estimate involves a larger facility approximately 750,000- square-feet in size with severely constrained funding. That option would not be completed until 2040, according to officials. “The cost estimates are based on size, how you do the cost curve, and the assumptions you make on risk,” one official with knowledge of the report told NW&M Monitor. “There is no scenario here that gets you done by 2025. … If they are serious about getting out of 9212 quickly they have to rethink their approach.”

CAPE Recommends Another Look at UPF

The CAPE also recommended that the National Nuclear Security Administration take another look at its plans for UPF, which suggests that an approach similar to the modular plutonium strategy at Los Alamos that is set to replace CMRR-NF because of the cost of the facility might be in store for UPF as well. “The recommendation is not what do you cut out here and there. It’s go back and look at this thing and reevaluate what your assumptions are and how do you do this,” one official with knowledge of the report told NW&M Monitor. “The issue is the model of UPF and CMRR is not affordable.”

One former Administration official suggested that the project would not be sustainable at such a high cost, especially given the funding pressure on the NNSA and other parts of the government. “We’ve already undergone severe cost escalation in the 2010, 2011 timeframe on UPF by a factor of two, and now they’re telling me it’s going to be another factor of two? Well, shut the door, we’re out of luck on uranium,” the former Administration official told NW&M Monitor. “We’ve got to figure out some way for that not to be the case.”

A ‘Top Down’ Approach

The CAPE study is believed to have used a “top down” approach to estimating the cost for the facility, using historical cost data for major one-of-a-kind Department of Energy and Department of Defense facilities to project the cost per square foot of UPF, and officials with knowledge of the report cautioned that the estimate was not the same as a cost estimate that analyzed the various components of the actual facility. The NNSA is not planning to update its cost estimate on the facility until the UPF project is 90 percent designed, which isn’t expected to occur until mid to late summer of next year. The NNSA declined to comment on the CAPE report, and CAPE did not respond to a request for comment.

The NNSA in the past has pushed back against CAPE estimates. Notably, the CAPE estimated that the B61 life extension program would cost approximately $10 billion, about $2 billion more than the $8.1 billion estimate compiled by Sandia National Laboratories for the NNSA. Much of the discrepancy involved differences of opinion in the amount of risk that could be managed in the program, and ultimately, the Nuclear Weapons Council signed off on the project at the lower cost estimate. “There is not a very good track record for accurate costing of these big facilities and projects,” the former official said. “They make relatively conservative assumptions about how funding profiles should go and how you should be executing large construction projects, based on their DoD experience.”

Construction Start Slated for 2016

UPF officials said this week that it planned to begin construction on the facility in early 2016, but excavation of massive tons of dirt and filling the hole with concrete to prepare a stable base for UPF will take place before the formal start of construction. “Our plan today is to start nuclear construction in the early calendar year of 2016 … and nuclear construction will be the first placement of concrete for the foundation of the building,” UPF Federal Project Director John Eschenberg said. To clarify, he was asked if that was the building slab, not the concrete used to fill the excavated area. “The slab,” he responded. “The ceremonial start of construction.”

Part of the issue with the rising cost of the project is that the massive size of the building is predicated on the relocation of production operations from Y-12’s 9212 complex, which is considered the first phase of the project, but also phase two and three: the relocation of work currently done at Y-12’s Building 9215 (uranium machining) and Beta-2E (assembly and disassembly operations). The assumption is that if the building did not have to be built to accommodate phase two and phase three, it might not be as expensive, the official said. “What the CAPE is saying is take a look at what are the near-term needs and what is executable, which is kind of what they’ve done on CMRR,” the official said. “What do you need now versus what do you need later?”

Could ‘Modular’ Approach Be Applied More Broadly?

In the wake of the CMRR-NF deferral, Los Alamos proposed a new strategy to maintain the nation’s plutonium capabilities based on a “modular” approach that would include smaller—and cheaper—facilities. An initial NNSA examination of the new strategy delivered promising results earlier this year, which led the agency to embark on a more detailed study and business case analysis of the approach. Given other alternatives, which included the existing facility or moving plutonium capabilities beyond Los Alamos, most weapons complex observers expected the business case analysis to support the modular approach. The overall cost “depends on what you’re counting: the modules, the interim strategy? But it’s a lot cheaper than what CMRR would have been,” the official said.

When Los Alamos National Laboratory Director Charlie McMillan first outlined the modular plutonium strategy earlier this year, he said using smaller facilities would potentially allow the lab to meet the nation’s plutonium needs without having to build a massive facility like CMRR-NF, but his message seemed to apply to UPF as well. “It may seem easier to envision a large signature facility that does all things nuclear. That’s kind of what we had for the analytical capability in CMRR,” McMillan said. “But the reality is that the time frames needed to build them have simply become too long. To support this country’s current path for the stockpile, the labs and the plants need access to modern uranium and plutonium facilities sooner rather than later.”

—Todd Jacobson


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