DoD Analysis Reveals Cost Jump at New Nuke Facility

A new classified report has confirmed an astronomical and unsustainable cost increase for the proposed Uranium Processing Facility (UPF) at the Y-12 nuclear weapons complex, stating that the final price tag for the new building could be as high as $19 billion, according to the December 6, 2013, issue of Nuclear Weapons and Materials Monitor (only available by subscription).

The Department of Defense’s Cost Assessment and Program Evaluation group (CAPE) has performed a full analysis of the proposed UPF, and of another Department of Energy construction project: the Chemistry and Metallurgy Research Replacement – Nuclear Facility (CMRR-NF) at Los Alamos National Laboratory. The UPF would replace several aging uranium operations buildings at Y-12, which handle everything from weapons dismantlement to uranium processing. The CMRR-NF would increase plutonium production and research capabilities at Los Alamos.

The Project On Government Oversight has been concerned about both of these projects, particularly because the Department of Energy is infamous for construction projects with massive cost overruns and schedule delays, both of which have plagued the UPF and the CMRR-NF.

When the cost of the CMRR-NF jumped from $375 million to almost $6 billion, funding was delayed while alternatives were explored. Los Alamos proposed a “modular” approach, building several smaller facilities to address the most pressing plutonium concerns, instead of one large building. The NW&M Monitor reports that the CAPE study found this alternative, if implemented, will cost less than $2 billion, a significant decrease from the $5.8 billion the CMRR-NF was expected to cost. Although moving to a modular approach is certainly a step in the right direction, POGO remains unconvinced that any new facility is truly necessary.

The assessment of Y-12’s Uranium Processing Facility was less encouraging. In fact it confirms that the Department of Energy’s current plan is unsustainable in the current fiscal environment.

The official Department of Energy cost estimate for the UPF is still $6.5 billion and won’t be updated until the design is 90 percent complete, likely mid-2014. However, a Government Accountability Office report highlighted a 2011 review of the UPF project from the Army Corps of Engineers which found that due to budget constraints, the cost would likely be up to $11 billion. CAPE now estimates that just the first of three UPF construction phases will cost at least $10-$12 billion and could be as much as $19 billion, according to the NW&M Monitor. The entire project was originally expected to cost between $600 million and $1 billion.

In addition to these outrageous cost overruns, the completion date for the facility has been pushed back time and time again. The UPF would replace several aging uranium processing buildings at Y-12, most notably Building 9212, which the Department of Energy has been calling “genuinely decrepit” in budget requests for years. Although the facility was originally expected to be completed by 2018, the official estimate now puts uranium operations beginning in 2025. But CAPE found that the far more likely date would be 2030 or even as late as 2040, depending on various size and funding decisions. The NW&M Monitor says an official with knowledge of the report told them: “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.”

The CAPE group suggested focusing on the most vital aspects of the UPF project and applying the modular approach that helped to cut costs and delays at Los Alamos. “‘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.’”

POGO’s recent report on the UPF also offered several cost-saving ideas, including moving some uranium certification work to the Pantex Plant in Texas, which already has the space and equipment necessary to perform certain tasks currently executed at Building 9212.

It’s time for the Department of Energy to abandon the wasteful construction models of the past and to look at alternatives before ground is broken on this expensive and unnecessary facility.