B&W Y-12 FACING FEE HIT DUE TO UPF DESIGN PROBLEMS
NNSA’s Raines Details Emphasis on Contractor Accountability

The National Nuclear Security Administration has notified B&W Y-12 of the potential for a fee reduction in relation to the potentially costly redesign of the Uranium Processing Facility, NW&M Monitor has learned. And while NNSA has refused to publicly release its correspondence or comment on discussions with the contractor, the action hews closely to the contractor accountability approach reinforced by NNSA Associate Administrator for Acquisition and Project Management Bob Raines at this year’s Weapons Complex Monitor Decisionmakers’ Forum. “When we first got started, what we said was that accountability is important to us,” said Raines, who took over as the head of the agency’s new acquisition and project management organization last summer. “We will use our contracts for their full force and effect so that’s what we’re doing. Again, I think people are asking questions on things that are not finalized yet and I don’t want to speculate where we’re going. We’re going to do a review of where we’re at. We’re going to try to understand how we got where we’re at. And we’ll make a decision that meets the requirements of the contract.”

A Hard Line on Project Performance

The NNSA has taken a hard line on contractor performance on major projects this year, most recently sending a letter to B&W Y-12 about its concerns with the project and seeking to hold the contractor accountable for the design changes. Likewise, the agency in June accused Savannah River Nuclear Solutions of being negligent in its management of the Savannah River Site’s Waste Solidification Building and has asked for the company to return fee for that project. Raines said the new Office of Acquisition and Project Management had made it easier to hold contractors more accountable for project issues. “We’re just understanding, and we’re trying to explain to people, that the reason we created this APM group was to be able to say, ‘Hey, we have a contract that is the guiding principle for the contracts that we’re doing,’” Raines said. “I think our folks are learning and they’re learning what’s available to them a little more than they had in the past.”

Raines declined to go into detail about what went wrong at UPF, suggesting that the issues are still being analyzed, and he said it is too early to estimate how much the redesign would add to the cost of the project. UPF Federal Project Director John Eschenberg revealed earlier this month that the roof of the facility would need to be raised 13 feet, the walls would have to be thickened from 18 inches to 30 inches, and the facility’s concrete foundation slab would have to be about a foot thicker. The current Critical Decision 1 cost estimate for the facility is between $4.2 and $6.5 billion, which includes about $2 billion in contingency funds. “That’s doing things the right way,” Raines said. “When we CD-1 a project that early in the design stage, we want to have that much contingency. I think that we did the right thing on that and we’re going to go take a look and see what the impacts are.” He said more will be known about the cost when a “replan” is completed at the end of this month, but he emphasized that the redesign could allow for savings that could offset some of the possible cost increases. “We had risks on this job and we had opportunities on this job,” Raines said. “We are mining the opportunities and we have generated some new opportunities partially as a result of the risk that we realized, so that will generate some opportunities that heretofore we wouldn’t have been able to do because of the way the building was going to be constructed.”

Size of Design Team To Increase

This week, the NNSA also confirmed that the federal and contractor team working on the UPF will also grow, both in the number of employees and the office space where the high-priority project is being carried out. NNSA spokesman Steven Wyatt this week confirmed that about 10 to 15 employees would be added to the federal staff of UPF before the end of the year, with an unspecified number of design staff to be added to the contractor group. “We will be adding to the overall UPF project team in FY 13,” Wyatt said in response to questions. Federal staff will be added to the team by January “with specialty skillsets in the areas of structural engineering, fire protection safety, criticality safety, nuclear safety, chemical processing engineering and electrical engineering,” Wyatt said.

The reason for bumping up the NNSA staff is to “ensure that safety is appropriately integrated into the overall design of the project,” Wyatt said. That was one of the key concerns raised by the Defense Nuclear Facilities Safety Board earlier this month, with board members emphatically stated that safety components were lagging far behind the design progress in the earlier effort.

According to Wyatt, the current contractor and federal design team has 560 people. That includes nine federal employees, 193 B&W Y-12 employees supported by another 88 people working under “staff augmentation” contracts, and 270 people working on the design as subcontractors under Basic Ordering Agreement. B&W Y-12 previously said there were four multi-company BOAs for the UPF design, with those headed by Merrick & Co. (special mechanical design); Jacobs Engineering (utility design); CH2M Hill (architectural/structural tasks and drafting support group); and URS Energy & Construction (process and instrumentation design support and 3D mechanical design.

Design Team Seeking Space Near Y-12

The UPF team is currently working out of multiple locations, including a 65,000-square-foot building in Commerce Park about a mile from Y-12. There also is a 32,000-square-foot operation in Knoxville near the National Transportation Research Center. Besides that, the UPF team occupies some of the space in the Department of Energy’s Office of Scientific and Technical Information in east Oak Ridge. But the UPF team is seeking a significant amount of additional space.

Following the DNFSB hearing earlier in the month, B&W Y-12 bought advertisements seeking an additional 48,500 square feet of office space near Y-12. The building or buildings would have to be equipped to access controls to accommodate the high-security nature of the work. “The Lessor will need to perform possible building modifications and various upgrades in a timely manner as move-in/occupancy is planned for June 1, 2013,” one advertisement said. About 260 employees will work in the new facility, according to the ad. “We are trying to consolidate our personnel as much as possible, so we are looking for space that is in close proximity to Y-12 and to our existing main off-site offices,” Wyatt said. —Todd Jacobson and staff reports