Inspection Report: OAI-M-17-07

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May 19, 2017

Construction Rework at the Mixed Oxide Fuel Fabrication Facility

In 1999, the National Nuclear Security Administration (NNSA) contracted with a consortium, now named CB&I AREVA MOX Services LLC (MOX Services), to design, build, and operate a Mixed Oxide Fuel Fabrication Facility (MOX Facility). This facility is intended to be a major component in the United States’ program to dispose of surplus weapons-grade plutonium.  At that time, the MOX Facility had an estimated total project cost of almost $5 billion with a projected completion date of September 2016. According to the 2016 Updated Performance Baseline for the Mixed Oxide Fuel Fabrication Facility at the Savannah River Site, issued in September 2016, the MOX Facility is expected to cost $17 billion with a completion date as late as 2048.

Over the last several years, the MOX Facility has been the focus of several audits and reviews to evaluate project cost increases and schedule delays. Additionally, the Office of Inspector General (OIG) Hotline received and referred to NNSA an allegation that construction rework contributed to the cost issues at the MOX Facility and resulted in a waste of Department of Energy funds. In response to the OIG Hotline referral, NNSA performed an assessment that substantiated the allegation. We initiated this inspection to determine whether NNSA had responded to concerns regarding construction rework at the MOX Facility.

We found that NNSA had directed MOX Services to establish an effective management system to address construction rework at the MOX Facility. As a result, MOX Services developed and implemented a comprehensive new desktop procedure. NNSA also increased its oversight of rework. Because the construction rework procedure and oversight processes were recently implemented, we determined that it was too early to fully assess their effectiveness. However, we noted that NNSA was still in the process of resolving the alleged waste of Department funds related to construction rework substantiated in its assessment.

We suggest NNSA continue to monitor construction rework and implement additional process improvements deemed necessary to mitigate future occurrences. However, to improve MOX Facility construction rework management, we made recommendations to the Contracting Officer for the MOX Project Management Office.  Management concurred with the report’s recommendations and provided a path forward to address the issues identified in the report.

Topic: Management & Administration