Scathing Contractor Evaluation Should End the MOX Project
POGO and other groups send letter to policymakers recommending cancellation
By: Lydia Dennett | March 1, 2017
What does it take to get a wasteful government project canceled? That’s the question the Project On Government Oversight (POGO) has been asking about the Mixed Oxide Fuel Fabrication Facility, known as the MOX project, for years.
With luck, a scathing evaluation by the National Nuclear Security Administration (NNSA) about the contractor in charge of MOX—released today by the Savannah River Site Watch—will be the final straw.
MOX was designed to convert weapons-grade plutonium into fuel for US commercial nuclear reactors as part of a diplomatic deal with Russia. But last year, Russian President Vladimir Putin announced he would be withdrawing from the non-proliferation agreement that was the basis for building the MOX facility.
Adding to the project’s woes is the fact that it’s astronomically over budget, behind schedule, and lacks even a single potential customer for the nuclear fuel. Now, the NNSA’s annual performance evaluation for CB&I AREVA MOX Services has provided a searing indictment of the contractor’s project management—or lack thereof.
NNSA identified several specific instances where the contractor gave misleading or inaccurate information to the government, Congress, and the public, and detailed several incidents of poor management that have led to significant cost growth and delays in completing the project.
For instance, NNSA deemed the contractor’s claim that the project is at least 70 percent complete as “patently false.” NNSA further found that the contractor compounded the problem by spending “considerable effort and resources” challenging NNSA’s own estimates rather than making up for the lack of progress on the program.
Any “improvement over the past year’s performance simply mitigates (and is not sufficiently impactful to reverse) the cost and schedule increases caused by the contractor’s previous inefficient performance,” NNSA’s evaluation stated.
The evaluation also noted that CB&I AREVA MOX Services had been given the opportunity to show their commitment to improving project management by submitting a firm fixed price proposal, but had declined to do so.
Part of NNSA’s evaluation process requires the contractor to complete a self-assessment of their work over the past year.
CB&I AREVA MOX Services rated themselves “Excellent” overall, with a score of 92 percent for the project management section of the self-assessment, the section that makes up almost the entirety of the evaluation. But NNSA found their cost, schedule, and technical performance was unsatisfactory and awarded them 0 percent. As a result, CB&I AREVA MOX Services received an extraordinarily low 8.9 percent of their total available award fee.
The NNSA cited several reasons for significantly reducing the contractor’s award fee, including:
1. A breakdown in management systems that resulted in “the inability to demonstrate that planned work or procurements were necessary or required.”
2. A continued “lack of transparency and openness in external communications with key project stakeholders...including continued release of misleading and inaccurate project information.”
3. “The completion date (and other schedule dates) have continued to fluctuate significantly and inexplicably throughout the year.”
The agency ultimately concluded that “NNSA paid for and was provided an incomplete and inaccurate document that will require additional work in order to ascertain and document the full set of facts. This situation is representative of the contractor’s performance reporting throughout the year.”
This absolutely withering evaluation and the significant downgrade in the award fee determination followed last year’s poor evaluation and award fee determination. CB&I AREVA MOX Services was awarded 49 percent of the potential award fee in 2015. However, NNSA noted in the evaluation at the time that “overall performance is below the level needed for successful project completion.”
This most recent evaluation comes after years of failures.
Completing construction of the facility alone has gone from $1.6 billion to a staggering $17 billion—over 10 times the original estimate. That cost doesn’t include operating the plant over the next 20 years. Independent estimates have found that, over the facility’s lifetime, which includes operating costs and construction costs, MOX will cost taxpayers $110 billion.
While the facility was supposed to be fully constructed in 2007, the Army Corps of Engineers recently released a report stating that MOX won’t be finished and ready for operations until 2048—putting it 41 years behind schedule.
And in 2008 the project lost it’s only potential customer for the mixed oxide fuel and hasn’t been able to find a single replacement customer.
So why, despite years of poor performance, Congressional debate, and even an attempt by the Energy Department to cancel the project in 2016, is the MOX project still receiving hundreds of millions of dollars every year?
It is likely in part due to a very successful lobbying effort. The two companies that make up CB&I AREVA MOX Services, Chicago Bridge & Iron Works (CB&I) and AREVA, spent a total of $2.4 million lobbying the government in 2015 alone on various issues including the MOX project. In the first two quarters of 2016, the groups spent $1.4 million. That amount doubles when including other organizations that listed MOX as a lobbying objective, like the International Brotherhood of Electrical Workers.
Furthermore, the contractor has effectively lined up several Senators and Representatives who have made sure that taxpayer dollars continue to flow to the MOX project, and thus to CB&I AREVA MOX Services. Senators Lindsey Graham (R-SC) and Tim Scott (R-SC), and Representatives Joe Wilson (R-SC), James Clyburn (D-SC), and Rick Allen (R-GA) have done their best to support MOX.
During the budget process last year, Representative Wilson wrote a letter to the House Committee on Appropriations Subcommittee on Energy and Water Development urging them to continue funding the MOX program. Representatives Clyburn and Allen also signed the letter.
In 2013, Senator Graham placed a hold on then-Secretary of Energy nominee Ernest Moniz until Moniz promised to finish the MOX plant. Graham eventually relented and removed the hold but continues to be one of the most outspoken MOX supporters. In March of this year, Senator Graham tweeted out a fact sheet of propaganda about the program to his 49,000 followers. Much of the information in that fact sheet was determined by NNSA to be misleading or straight-up wrong.
MOX should be an easy place to cut wasteful spending, and today POGO and the Savannah River Site Watch sent a letter to policymakers asking them to cancel the wasteful project. It’s unaffordable and has been delayed so long that the political landscape has changed. Continuing to spend billions of taxpayer dollars to uphold a deal that no longer exists is madness. Not to mention continuing to support a contractor that has lied to the government, Congress, and the American taxpayer. It is clear that MOX has failed the viability test and it’s time to lay it to rest once and for all.