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Audit of MOX at Savannah River Site Faults Federal Agency, Contractor

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May 28 --The National Nuclear Security Administration was warned the cost of a plutonium-processing plant at Savannah River Site was at high-risk of steep increases before the start of construction.

According to a recent federal audit, the mixed-oxide fuel fabrication facility was approved by the U.S. Energy Department before contractor Shaw Areva MOX Services completed the plant's design. The project does not have an up-to-date cost estimate and schedule, which could contribute to unrestricted cost growth if construction continues, the audit concluded.

Initial cost and schedule baselines underestimated labor required to install piping, valves, duct work and electrical cable, as well as personnel required for the work, the audit said. More workers with nuclear engineering design and manufacturing experience were needed than available. The project had a 20 percent employee turnover rate in fiscal year 2012.

"The NNSA and MOX Services have been largely unsuccessful in controlling the cost and schedule of the MOX facility," the audit said.

Funding for construction of the MOX facility, which is intended to convert weapons-grade plutonium into commercial reactor fuel, is only guaranteed through the end of September. The Obama administration has proposed cutting funding for the project and placing it on standby during the fiscal year beginning Oct. 1 while cheaper alternatives are studied.

The Department of Energy's Office of Inspector General conducted the audit from May 2012 through this month to study NNSA's management of the facility. In 2012, revised cost and schedule estimates released by the NNSA increased total project cost to about $7.7 billion , a growth of about $2.9 billion requiring three additional years of construction.

The Department of Energy approved project estimates in April 2007 and started construction on the MOX facility four months later. The contractor had been working on the design, modeled on a facility in France , since 1999.

A July 2006 independent review verified the initial cost estimate, but cautioned that costs were at a "significant risk of increasing" because a final design was not complete and design reviews would be done in stages during construction.

That same month, a top NNSA administrator warned that the incomplete design and planning could lead to cost overruns.

The NNSA, a semi-autonomous agency of the Department of Energy , authorized studying the addition of a plutonium oxidation facility at the plant after it scratched a $4 billion standalone facility that would produce fuel for the MOX plant. MOX Services estimated a $262 million cost for the addition, but determined it would have no adverse impact on the construction timetable.

According to the audit, NNSA officials said they have taken steps to improve project management performance -- including a review process and independent assessments. NNSA will require future nuclear facility project designs be at least 90 percent complete prior to cost and schedule approvals.

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