BNFL Inc loses Hanford cleanup contract

30 May 2000

In another blow to the beleaguered company, BNFL has lost a multi-billion dollar contract with the US Department of Energy (DoE).

In announcing the cancellation of the contract to construct a high level waste treatment facility at the Hanford site in Washington state, Energy Secretary Bill Richardson said: “BNFL’s proposal was outrageously expensive and inadequate in many ways. We are committed to cleaning up the Hanford site as rapidly as possible. We will start competition for a new contract right away, select a new contractor by the end of the year, and conduct business so we should be able to meet our long term schedules for operating a waste treatment plant.” In August 1998 when the contract was first agreed, BNFL Inc, the company’s US subsidiary, said the work could be done for about $7 billion. On 24 April this year it increased its estimate to $15.2 billion. This was clearly too great a cost for the DoE to bear.

A DoE statement says that the BNFL proposal raised serious concerns in many areas including cost, schedule, management and business approach. The technical design was said to be sound, but the DoE considered it over-conservative, shifting risk from the contractor to the government.

The current design team will continue work during the transition period. The DoE aims to complete the new bidding process by the end of this year.

Following the decision, Richardson reiterated the DoE’s commitment to cleaning up the Hanford site. Following a meeting with the Washington state governor Gary Locke, he announced a five part agreement with the state.

“•The department and the state will immediately amend the existing consent decree to include two new milestones. By August 2000, the department will issue a Request For Proposal for a new design and construction contract asking for proposals that would enable the department to meet the 2007 milestones set under the Tri-Party Agreement. By 15 January 2001, the department will award a contract.

•Over the next 15 months, the department and the state will attempt to negotiate a new consent decree establishing further commitments aligned to the new contract.

•The Secretary unilaterally will commit to no shipments of waste to Hanford from new sources while the department works to get the new contract on a firm footing.

•The state and department will continue to talk about longer term commitments regarding the shipment of waste into the state.

•The department and the state have agreed to engage the US Environmental Protection Agency in a discussion about how to realign commitments for the entire Hanford site to ensure that they are achievable and to address the most important problems first.” BNFL issued a statement following the decision, saying: “While disappointed that the DoE has decided to recompete the entirety of the contract, we are pleased they have determined that the design and technical solution is sound.” •British Energy (BE) has said it is in negotiations to change its contract agreements with BNFL. It wants to switch from reprocessing its spent fuel to long-term storage, a move which the company believes will save it $2.6 billion.

“As far as we are concerned, reprocessing is an economic nonsense and should stop straight away,” said Michael Kirwan, British Energy’s finance director.



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