December 17, 1997
 
Charmian Schaller, Managing Editor
Los Alamos Monitor
256 DP Road
Los Alamos, NM 87544

Dear Charmian: 

Your December 5, 1997 issue contained an article under the mysterious headline "Lab says LA Study Group misunderstood."  Most of the article was devoted to T.J. Trapp's disputations of previously published DOE/LANL cost figures for pit production.  Dr. Trapp directs the pit production effort in the Nuclear Materials Technology (NMT) Program.  It is quite unlikely that DOE published its earlier estimates without his input. 

It is strange that you attributed DOE's cost figures to me.  I personally have no idea what it will cost to produce pits.  My only contribution was to present DOE's numbers, with their sources, for your convenience.  If you guys at the Monitor would read the cited documents carefully, you might be less confused and less quick to fall for a shell game that moves projects and costs in and out of "pit production" as convenient -- even under your eyes, in course of your article!

The gist of the matter is this.  In July of 1996, DOE estimated the incremental total "transition" cost of establishing pit production capacity at LANL to be $312M, plus $30M/year for operations thereafter.  The estimating team included LANL representatives.  The purpose of the study was to help choose a location for pit manufacturing, in part by comparing total incremental present-value costs at each site.  (As an aside, the team didn't do their present value analysis properly.) 

The $312M LANL cost DID NOT INCLUDE related necessary but so-called "independent" facility upgrades.  I and others questioned this, and Dr. Trapp now agrees with us -- sometimes. The study included -- or said it included -- "operating costs" in their total "transition cost" (see graph, p. 26, "Stockpile Management Preferred Alternatives Report").

Yet the DOE is now telling Congress that acquiring pit production capacity will cost about $1.1 billion, about three and one half times as much as last year's published numbers. 

The increase has three components.  One is the misleading earlier omission of many "independent" projects, which are now finally counted as part of the project.  The second is a doubling in the estimated cost of the CMIP itself (from $300M to $601M; perhaps it will be higher next year), along with an eight-fold increase in ancillary "non-nuclear" pit production-related costs.  The third is a huge increase in incremental operating costs prior to project completion. 

Part of the "confusion" may be that it was initially in DOE and LANL's perceived interest to exclude projects from the pit production mission, since those projects would then have required more analysis under the National Environmental Policy Act (NEPA) prior to construction.  And inclusion could have adversely affected DOE's litigation on the stockpile stewardship and management program (in which our organization is very involved). 

The selection of LANL for the pit mission over the Savannah River Site was predicated on these low estimates.

Massive cost inflation is not unusual for large projects at LANL.  According to DOE and LANL sources, the CMR project has increased in estimated cost from $195M (all three phases) to $224M (just the first two phases); the pit-related portion of the non-nuclear reconfiguration has skyrocketed from $14M in 1995 to an estimated $116M today; the Nuclear Materials Storage Facility renovation has increased from $13M in 1992 to $57M today (not counting $19M in 1987 dollars sunk into the original unusable facility); and total DARHT costs have increased from an estimated $53M in 1993 to at least $250M today.  Dr. Trapp's organization is heavily involved in three of these four projects.

More recently, Dr. Trapp has been quoted as saying that DOE and LANL are now considering an initial goal of a 20-pit-per-year capacity, instead of the original 50 (which would be achieved later).  Fine -- but last year, in the impact statement for the stewardship and management program, DOE said that LANL already HAD the setup to make about 20 pits per year, under the Surveillance Pit Rebuild Program.  The first pit is supposed to roll off the glovebox line this fiscal year.

Numerous external reviewers have questioned the ability of both DOE and LANL to manage large projects and their safety, security -- or to simply to manage, period.  Last week, the Defense Nuclear Facilities Safety Board broadly criticized plans for the CMIP, repeating many of the Study Group's concerns.

Finally, and inconsistently, Dr. Trapp claims that many of the costs included in the $1.1 billion are for tasks the lab "must do independently of whether we're doing pit manufacturing or not."  Haven't we heard this before?  The source of this $1.1 billion is a recent DOE report to Congress on the cost of "plutonium pit production and remanufacturing" ONLY.  Is Secretary Pena perjuring himself?

This situation calls for a careful EXTERNAL investigation.  If history is any guide, plans and budgets will change again before the first pit is built.

Greg Mello, Director
Los Alamos Study Group
212 E. Marcy St. #10
Santa Fe, NM 87501
505.982.7747