In a recent interview with the Los Alamos Monitor, Kingston Reif correctly noted that, given the current budget environment and the recently passed debt limit deal, Congress is likely to continue to closely scrutinize the major construction projects within the Department of Energy’s (DOE) National Nuclear Security Administration (NNSA).
In February 2011, the new Republican-led House proposed to cut over $300 million from NNSA’s Fiscal Year (FY) 2011 request of $7 billion for weapons activities in its version of a year long continuing resolution for FY 2011 (nearly all of this money was restored in the final continuing resolution passed by Congress in April).
On July 13, the House approved the FY 2012 Energy and Water Appropriations Bill, which includes a cut of nearly $500 million to the FY 2012 request of $7.63 billion for weapons activities and a reduction of over $150 million to the Mixed Oxide (MOX) fuel program (see here for my full analysis of the bill). Even with a $500 million cut to weapons activities in FY 2012, the Committee’s recommendation is still a three percent increase over the FY 2011 level. NNSA would still have more than enough money to maintain a safe, secure, and reliable stockpile.
In its report on the bill, the Appropriations Committee stated that “the economic crisis requires that NNSA proceed with its modernization activities in a responsible manner and the Committee is seriously concerned with the recent cost growth reported for construction of the Uranium Processing Facility (UPF) and the Chemistry and Metallurgy Research Replacement (CMRR) Project.”
NNSA has a long history of poor management and cost overruns, which has made it a fixture on the Government Accountability Office’s “High Risk List”.
This cost growth is actually far worse than previously understood.
In 2010, the DOE examined cost overruns for 15 of its most expensive programs over the past decade. Of the 15 programs, six are managed by NNSA. The charts linked to below contain shocking information from that analysis.
Unsustainable Cost Growth
Chart 1 shows the percentage of cost growth compared to each project’s original cost estimate. In 2010, the total increase for all of these programs from their initial baseline cost estimate was $11 billion. In every case, construction cost $100 million more than the original baseline. Four of the programs, the Pit Disassembly and Conversion Facility (PDCF), Mixed Oxide Fuel Plant (MOX), the Uranium Processing Facility (UPF), and the Highly Enriched Uranium Materials Facility (HEUMF) more than doubled in cost before NNSA signed off on their design. MOX and the UPF are still under construction.
NNSA has not even picked a location for the PDCF.
Since DOE’s analysis was completed, two projects have grown even more expensive: the CMRR, which does not appear in the chart above, and the UPF. The CMRR, which was originally estimated to cost $350 to $500 million, is now estimated to cost up to $5.9 billion, almost a 500% increase in cost.
When it was first proposed in 2005, the UPF was estimated to cost $500 million. As of last year that cost had grown to $6 to $6.5 billion. The most recent reports say that the facility could cost up to $7.5 billion. That is a 700% increase in cost over the past five years.
Tough Choices Ahead
Over the next decade, NNSA is planning to complete construction of the CMRR, UPF, MOX and the PDCF. Considering DOE’s history, costs for all of these programs will continue to grow.
In light of the debt limit deal’s new spending cap for defense programs, Congress should search for budget savings by asking tough questions about the affordability and mission of these large-scale NNSA construction programs. In a time of fiscal constraint, Congress should make the best use of our resources and shouldn’t waste precious tax dollars on questionable programs that are constantly over budget.
In the near term, the Senate should follow the House’s lead and oppose early construction of the CMRR before design activities for the facility are completed.
Given the incredible cost growth for construction of the CMRR and UPF, Congress should also require NNSA to assess the impact of building one facility before the other. The bipartisan Congressional Commission on the Strategic Posture of the United States stated in its 2009 final report that if funding couldn’t be found, the CMRR should be built before the Uranium Processing Facility proposed for Oak Ridge, Tenn., instead of concurrently with it.
Congress could also demand greater accountability from NNSA in cases when facilities (such as the UPF and the CMRR) that are not completely designed have increased in cost by more than 100%. In such cases NNSA should be required to go back to the drawing board and come up with a less expensive plan.
Finally, Congress should continue its close scrutiny of the MOX program. Earlier this year, the House voted to significantly reduce funding for the PDCF facility because NNSA failed to make basic decisions about design and construction. The PDCF is needed to provide feedstock for the MOX facility. Without progress on the PDCF facility, the MOX program is essentially dead in the water.