By George Lobsenz
In a competition that appeared to have little suspense, the Energy Department announced Monday it had selected a consortium led by URS Corp.‘s Washington Division for a minimum six-year contract to begin the mammoth task of emptying and closing in place 49 underground storage tanks at its Savannah River Site containing some 34 million gallons of high-level radioactive waste left over from decades of nuclear weapons production.
The contract, which covers an estimated $3.3 billion in cleanup work at the South Carolina site and has an optional two-year extension, went to Savannah River Remediation LLC, which consists of URS Washington Division; Babcock & Wilcox Technical Services Group Inc.; Bechtel National Inc.; CH2M Hill Constructors Inc.; and Areva Federal Services, LLC. DoE said “pre-selected subcontractors” include EnergySolutions Federal EPC Inc. and Washington Safety Management Solutions, LLC.
The contract award essentially keeps Savannah River’s tanks under the management of the current tank contractor at the site, Washington Savannah River Co. (WSRC), because most of the companies in Savannah River Remediation are part of WSRC, which is led by URS.
URS also leads another consortium that earlier this year won a DoE competition to manage the 177 high-level waste storage tanks at the department’s Hanford site in eastern Washington. That group, called Washington River Protection Solutions, also includes Areva and EnergySolutions.
The dual contract awards mean URS is in charge of what are arguably DoE’s two most dangerous and challenging nuclear cleanup challenges–the aging underground waste tank farms at Hanford and Savannah River, both of which have some tanks that are leaking or threatening to leak waste into soil and groundwater near major river systems.
The Savannah River contract is different than the Hanford tank contract because it involves a larger scope of operations. In addition to emptying and closing waste tanks, Savannah River Remediation will operate the Defense Waste Processing Facility, which for years has been converting Savannah River tank residues into a glassified waste form suitable for deep geologic burial. In contrast, waste processing has not yet begun at the Hanford site, where Bechtel is currently building waste processing facilities under a separate contract with DoE.
As has been its custom on large contract awards during the Bush administration, DoE declined to say how many other bidders there were for the Savannah River tank contract and what companies were involved.
However, one other consortium, Savannah River Tank Closure, publicly disclosed it was seeking the tank contract. That team was led by Parsons and included Fluor Daniel and Newport News Nuclear, a subsidiary of Northrop Grumman [NOC].
DoE also did not explain why it picked Savannah River Remediation for the tank contract–again, not a surprise because DoE typically will say only that winning bidders were judged to provide the best overall value to the government considering both price and quality. DoE’s reticence to talk is partly due to the predilection of losing bidders to challenge DoE contract awards as unfair.
However, industry observers say the Parsons-led consortium faced an uphill battle at best to get the Savannah River tank contract because Parsons and Fluor both already hold other major cleanup contracts at Savannah River.
Parsons is building massive processing facilities to separate and pre-treat salt waste in the tanks; the existing Defense Nuclear Waste Processing Facility cannot process the salt waste directly due to its complex composition of metals, organic chemicals and nuclear residues.
A Fluor-led consortium, meanwhile, was selected by DoE in January 2008 for another big cleanup and defense production contract at Savannah River addressing contaminated buildings, soil and groundwater at the site and including various nuclear weapons-related missions. The work awarded to Fluor-led Savannah River Nuclear Solutions, which also includes Northrop Grumman, was previously handled by WSRC.
Given Parsons’ and Fluor’s existing responsibilities at Savannah River, most industry officials considered it highly unlikely that Savannah River Tank Closure could win, especially since DoE in 2005 split off the tank waste operations into a separate contract competition specifically so it could hire a contractor that would be exclusively focused on the tanks.
Prior to the separation of the tank operations, WSRC managed all cleanup and defense operations at Savannah River.
The award to Savannah River Remediation follows by an announcement last month by DoE and Justice Department officials that WSRC would pay the government $2.4 million to settle allegations that the company sought to defraud DoE by failing to disclose during 2003 contract negotiations with the department that pension costs for workers at Savannah River would be sharply higher than DoE expected.
W. Walter Wilkins, U.S. attorney for South Carolina, said WSRC knew about the rising pension costs during the 2003 contract negotiations, but went ahead and signed a 2005 contract with the department that did not reflect those higher costs.
Subsequently, the company submitted several “requests for equitable adjustment” to DoE seeking to recover the higher pension costs. The company received an initial $1.2 million in additional compensation and then filed a second $35.6 million contract adjustment request.
Wilkins charged the contractor violated the federal False Claims Act by filing a claim on false pretenses. Washington Savannah River Co. did not admit to the violations in the settlement.
Savannah River Remediation, the new waste tank contractor, will take over the waste tanks in April and its base contract will run through March 2015. DoE has the option to extend its contract by two years if the contractor performs well.